Question

What is meant by the term antidilution? Give an example.

Short answer

Anti-dilution refers to the increment in earnings per share, resulting due to exercise of convertible security, options or warrants.

Step-by-step solution

Identification of the concept of antidilution

Anti-dilution is an increment in profit for each offer coming about because of the suspicion that convertible securities have been changed over or that choices and warrants have been worked out, or other shares have been given upon the satisfaction of specific circumstances.

Example to be considered under antidilution

For instance, an anti-dilutive condition would exist when the interest after tax or dividends of convertible security exceeds the current EPS increased by the quantity of normal offers endless supply of the security.