Preferred stocks or bonds convertible into common stock, or warrants to purchase common stock at a specified price or discount from market price. Common stock equivalents represent potential dilution of existing common shareholder equity.
A financial structure with stock outstanding that has potential for dilution, requiring a dual presentation of earnings per share by showing primary earnings per common share and fully diluted earnings per common share.
Dilution refers to the reduction in earnings per share (EPS) and book value per share that occurs when convertible securities, such as convertible bonds and preferred shares, or warrants and stock options, are converted into common stock.
A figure showing earnings per common share after assuming the exercise of all outstanding warrants and stock options, and the conversion of convertible bonds and preferred stock, all potentially dilutive securities.
A contractual right allowing existing shareholders to purchase additional shares of a new issue of common stock before it is offered to the public, aiding in preemptive protection against dilution of ownership.
