dilution


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Related to dilution: Dilution Factor, serial dilution

Dilution

Diminution in the proportion of income to which each share is entitled. Issing new shares often causes dillution.

dilution

A decrease in the equity position of a share of stock because of the issuance of additional shares. Dilution is usually detrimental to the position of existing shareholders because it weakens their proportional claim on earnings and assets. See also potential dilution.

Dilution.

Dilution occurs when a company issues additional shares of stock, and as a result the earnings per share and the book value per share decline.

This happens because earnings per share and book value per share are calculated by dividing the total earnings or book value by the number of existing shares.

The larger the number of shares, the lower the value of each share. Lower earnings per share may trigger a selloff in the stock, lowering its price. That's one reason a company may choose to issue bonds rather than new stock to raise additional capital.

Similarly, if companies merge or one buys another, earnings may be diluted if they don't increase proportionately with the combined number of shares in the newly created company.

Dilution can also occur if warrants and stock options on a stock are exercised, and if convertible bonds and preferred stock the company issued are converted to common stock.

Companies must report the worst-case potential for such dilution, or loss of value, to their shareholders as diluted earnings per share.

dilution

  1. the decrease in control and EARNINGS PER SHARE experienced by existing shareholders in a JOINT-STOCK COMPANY when SHARE ISSUES are made which attract new shareholders. Dilution is a particular problem in fast-growing, family-controlled companies where the need to raise new capital may dilute the founding family's shareholdings to below 50%, causing them to lose potential control of the company.

    In the past, companies have sought to avoid dilution whilst continuing to raise capital by issuing NON-VOTING SHARES; but these are nowadays disapproved of by most STOCK MARKETS.

  2. the weakening of the monopoly of skills of a particular occupational group by the recruitment of less-skilled workers to perform the same work. See SKILL.
References in periodicals archive ?
Nevertheless, the Board held in favor of ESRT with its conclusion that Liang's mark was likely to cause dilution by blurring ESRT's marks.
In the present study agar dilution has been adopted as a comparatively rapid, reliable and economical routine method for in vitro susceptibility testing of anti- pseudomonal agents, and MIC of different bactericidal drugs was determined against domestic clinical strains of P.
In determining whether a mark or trade name is likely to cause dilution by blurring, the court may consider all relevant factors, including the following: (i) The degree of similarity between the mark or trade name and the famous mark.
If you did not have a serial dilution but made each dilution step different, the equation would be, for example, 1/2 x 1/5 X 1/10 x 1/2 = 1/200, or 1:200, or 2 x [10.
The conventional serial dilution ELISA has been modified to a recombinant antigen based single serum dilution ELISA to reduce the reagent costs and increase the number of the samples to be screened as described earlier for canine leptospirosis (6).
Since the purpose of anti-dilution law is not necessarily to protect consumers, as is the case with infringement laws, the likelihood of consumer confusion is largely immaterial to a dilution claim.
The formula for calculating populations after serial dilution is straightforward but requires careful attention to units.
Shareholders, particularly institutional shareholders, have become more sensitive to dilution issues raised by the size of shares reserved pools.
Dilution of C2 specimens will theoretically provide a practical and rapid accommodation.
GM now has 550 million shares outstanding, so Khattri doesn't expect any dilution problems when the bondholders do convert.
The owners of Victoria's Secret sued for trademark dilution, and the case ended up before the U.