dilution

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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 ?
against both trademark infringement and dilution in the United States.
Also, as a follow-up, I will have students look for a journal article in which the researchers have used serial dilutions in their work and ask them to explain why the serial dilutions were beneficial to the experiment.
Observed titres of serum samples were calculated by plotting the average of triplicate, corrected absorbance readings at serial dilutions until the PNT baseline was intersected (Fig.
There was a matrix effect evident in the 100-fold diluted milk samples, so we analyzed the milk samples using a standard curve in the presence of milk at the same 100-fold dilution to accurately ascertain the DA concentrations (data not shown).
Dilution of C2 specimens will theoretically provide a practical and rapid accommodation.
Figures 2 and 3 show the effect of dilution on boiling water resistance and hot oil resistance, respectively, for Adhesive 8110 and rubber compounds A, B, C and D cured for seven minutes at 191 degrees C.
In healthy individuals, ANA at dilutions 1:40, 1:80, 1:160, 1:320 and 1:640 was positive in 13.
Dilutions were performed manually; each dilution was obtained by diluting the original undiluted specimen rather than by dilutions of dilutions.
The procedure begins with the injection of a very dilute mixture (usually dilution No.
An investigative team organized by NATURE reports in the July 28 issue that the results of a controversial dilution experiment published in the journal four weeks ago are "not reproducible in the ordinary meaning of that word.
The system we've created with Staccato will provide Paratek high speed automated plate replications, high capacity plate storage, expanded capabilities for dilutions and reformatting, and easy to use application software.