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The timing of new equity shares

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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September 20, 2015 at 2:50 pm #272564
alighere
Participant
- Topics: 47
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Hi, John.
Please help me with the following statement: “By issuing new shares at a high price, a company will reduce the number of shares it must issue to raise the amount of capital it wants. This will reduce the dilution of earnings for existing shareholders.
I dont understand the last sentence.
plz help
September 20, 2015 at 4:54 pm #272571
John Moffat
Keymaster
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The more shares that they issue then the lower the earnings per share (the profits divided by the number of shares).
(The wording of what you quoted is terrible – issuing more shares dilutes the earnings. Dilutes means reduces, so ‘reducing the dilution’ is nonsense 🙂 )
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