dilution

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Dilution

Diminution in the proportion of income to which each share is entitled. Issing new shares often causes dillution.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

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.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
References in periodicals archive ?
An antigen titer was calculated from the thermal contrast by using a calibration curve established by 2-fold serial dilutions of 3 specimens in triplicate with known CRAG LFA titers ([R.sup.2] = 0.97).
One ml from each sample homogenate was added to 9 ml peptone water tube and the process was repeated to make serial dilutions (from [10.sup.-1] to [10.sup.-6),] then 0.1 ml was taken from each of [10.sup.-4] and [10.sup.-6] dilutions and plated on the surfaces of agar plates in duplicate.
Serial dilution titration skin tests in inhalant allergy: A clinical quantitative assessment of biologic skin reactivity to allergenic extracts.
Sensitivity of culture methods and PCR was determined by percent recovery and by using serial dilutions of L.
Yeast (Saceharomyces cerevasiae, Rhodotorula glutinis) and Mould (Aspergillus niger, Aspergillus flavus, Aspergillus parasiticus) were determined by FAO method described by Andrews.11 Approximately 50 ml of the juice samples were blended with 450 ml of butter field's phosphate buffer for 2 minutes and a serial dilution of (10-1 to 10-4) were made.
The use of PCR assays for the detection of parasites in tissues involves the generation of standard curves, often accomplished by adding a serial dilution of known parasite numbers to uninfected tissue ("spiking").
I use my automated liquid handler to perform serial dilutions in microtiter plates and I want to understand where the biggest potential for errors would be.
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).
Serial dilution is one of the most basic procedures in soil biology studies.
Pre-programmed application temp lates for Plate Replication, Serial Dilution, Assay Set-up, Hit Picking and DNA/RNA/Protein Purification allow researchers and scientists to begin working with the Sciclone ALH 4000 immediately, and provide the flexibility to easily switch between applications without the hassle and complexity of programming.
Scientists working in semiconductors and material science should keep an eye on the developments taking place in the understanding of homeopathy, especially its medicines, which are prepared through a typical process known as "potentization." Potentization invites serial dilution with succussion (violent strokes) or trituration at each stage.
The groups were not found, however, to have significantly altered their ancestral niche (defined as the range of temperatures over which they could maintain their populations during daily serial dilution culture).