- dilution
- (1) The difference between gross sales and net sales. Dilution is caused by sales that are reversed as a result of returns and/or allowances.(2) The reduction in an existing stockholder's position that results from the issuance of new shares. American Banker Glossary————Diminution in the proportion of income to which each share> is entitled. Bloomberg Financial Dictionary————A general phrase, describing the fact that as more shares are issued by a company, the interests of existing shareholders will be diminished. The specific impact is that the earnings per share of the company may be reduced as a result of the increased number of shares. A more specific meaning is used in the context of fully diluted earnings per share. Dresdner Kleinwort Wasserstein financial glossary————The diminution in the proportion of income to which each share is entitled. Exchange Handbook Glossary————Effect on earnings per share and book value per share if all convertible securities were converted and all warrants and stock options were exercised. NYSE Euronext Glossary
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FINANCE if a company dilutes its shares or the earnings on its shares, it increases the number of its shares that are available and so reduces the amount that each share will earn:• They issued new shares which diluted the equity of the current shareholders.
• $900 million equity infusion could dilute earnings by 10% next year.
— dilution noun [uncountable] :• The conversion of loan stock will give the new investors 58% of the ordinary share capital, representing a substantial dilution of equity.
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Reduction in the value of earnings and assets to existing holders of a company's shares caused by an increase in issued shares, which occurs when a rights or a bonus issue is made. In the US, fully diluted earnings per share are earnings after assuming the exercise of warrants and stock options and the conversion of convertible bonds and preferred stock.► See also Bonus Issue, Rights Issue.* * *
dilution UK US /daɪˈluːʃən/ US /dɪˈluːʃən/ noun [U]► the process or action of making something less strong or valuable: »The destroyer of brand integrity is ""brand dilution"", which is the perverse reward for popularity.
► FINANCE the process or action of making a company's shares less valuable by making more shares available: »The company is working to prevent dilution resulting from stock splits or similar transactions.
Financial and business terms. 2012.
