You're interested in buying a part of a football team. To decide if it's a worthwhile investment, you look at the team's success in terms of wins (earnings) and compare it to the cost of buying a share in the team (price).

Price (Market Value of a Share): This is like the cost of buying a share in the football team. It represents the current market price of a single share of the team, if it were publicly traded.

Earnings (Profit): Think of this as the team's success or profitability. In business, it's the net income or profit of the company, usually considered on a per-share basis.

P/E Ratio Calculation: To calculate the P/E Ratio, you divide the price of a share in the team by the team's earnings per share. For example, if buying into the team costs $200 per share (price) and the team's earnings per share are $20, the P/E Ratio is 10 ($200 / $20).

The P/E Ratio helps you figure out how much you're paying for a share in the team compared to its profitability. In investing, a higher P/E ratio can suggest that investors expect higher future earnings growth. It's like paying a premium for a share in a football team that is expected to win more games or championships in the future. Conversely, a lower P/E ratio might suggest the team is undervalued or not expected to perform as well in future games.

Just like in sports where the expectation of future success can increase the value of a team, in the stock market, a company's future growth prospects often play a significant role in determining its P/E ratio. However, like any metric, it's best used in conjunction with other analyses since it doesn't tell the whole story on its own.