Imagine if for $1 million you could buy a business that makes $100,000 in annual profit. In investing lingo, one would say this business trades at 10 times its earnings or at a price-to-earnings (P/E) ratio of 10. It's helpful. In this particular scenario, one would recoup the purchase price after 10 years. Year 11 and beyond would allow the investor to make serious money.Of course, it's an over-simplistic way of looking at things. In the real world earnings are rarely static. But it still demonstrates how ...