dilution

Process of reducing the concentration of a solution by the addition of a solvent.

The extent of a dilution normally indicates the final volume of solution required. A fivefold dilution would mean the addition of sufficient solvent to make the final volume five times the original.

dilution

Reduction in the value of earnings and asset values to shareholders caused by the issue of more shares. A rights issue, for example, results in an increase in the total number of shares issued, with a corresponding dilution of the value of each share. A dilution of earnings, where the increase in issued shares is not accompanied by a commensurate increase in profits, may also arise when a less profitable company buys a more profitable one.