What is dilution and what is diluted profit

Hello, "thinning", to use a simple image of the analogy, just like you use a grinding stick to grind the dumpling skin, in fact, this piece of dough is so big, but it looks like the skin is getting bigger and bigger, don't you know that the dough is getting thinner and thinner. Dilution is used in the expansion of the share capital of listed companies, as long as the shares of listed companies increase, it will play a dilutive role in net assets per share and earnings per share. This is because the company's net profit or net worth will not increase suddenly.

For example, if a company achieved a net profit of 100 million yuan and a net asset of 300 million yuan in its annual report last year, but the company's total share capital expanded from 100 million shares to 100 million shares through the transfer of shares, the company's earnings per share will be reduced from 1 yuan to 100 million yuan (100 million yuan of shares), and the net assets per share will also be reduced from 3 yuan to 2 yuan. If the company's share price is $30, the company's price-to-earnings ratio and price-to-book ratio have risen sharply, from 30 times to 45 times, and from 10 times to 15 times, and the company's valuation has also gone up.

Generally speaking, the total share capital of a listed company will expand in private placement, public issuance, share transfer, share gift, etc., which will inevitably dilute the company's net profit and assets. Listed companies turn 10 to 10, why is the market so popular? The expansion of share capital and the decrease of the stock price after the ex-rights will attract institutions to fill in the rights when the rights are good, and as soon as the rights are filled, the opportunity will naturally be there.

It turns out that people are buying a large proportion of the theme of transferring shares for the possible filling rights in the secondary market.

This information does not constitute any investment advice and should not be relied upon by investors as a substitute for their independent judgment or decision making based solely on such information.

Diluted. Figuratively speaking, it means less.

** and other economic activity terms.

For example, in Example 1, although capital increase and share expansion are the choice of most domestic insurance companies, capital increase and share increase means that more people or institutions own the equity of a listed company, and the shares of the listed company are less than the shares they originally owned, that is, the share capital of the listed company is diluted.

Example 2, any emerging industry is a profiteering industry at the beginning, with low costs, high profits and few competitors. Once this market is discovered by other businessmen who want to cut a piece of the cake, the entry threshold for the industry will become higher, the cost will rise, and the profit will fall. Since later merchants entered the late stage of the windfall stage, their expectations were high, and once they entered, the profits were less.

That's dilution of profits. In fact, profit dilution should be said to be profit rationalization.

Dilution period. Figuratively speaking, it is a period of gradual shrinkage or decrease in the profits of equity or other economic activities.

For example, in Example 1, the current stage of online games is a normal stage of development after a large number of manufacturers flock in, and this stage is the profit dilution period.

Example 2, taking overseas shares - Datang as an example: Datang (991), will carry out state-owned stock equity reform, ** plans to issue subscription warrants to all overseas shareholders of Datang, for every 10 shares of Datang shares, you can get 7 warrants, and the exercise price is about 10% of the net asset value per share of Datang, ** to distribute Datang warrants, the exercise price is about 36 yuan, when all shareholders exercise, the state's equity in Datang will be diluted to 5 percent.

**The dilution period is the stage at which it is distributed to all shareholders.

Diluted cost price refers to the fact that investors can reduce the cost of the high chips we have purchased before, that is, to periodically reduce the cost of the high chips we have previously purchased.

Under normal circumstances, diluted costs are mainly used in regular investment and margin call, regular investment can accumulate a large number of chips in the process of constantly diluting the cost price, once the trend reverses, then we can quickly cash out profits. Margin call, on the other hand, is to reduce our unit cost by increasing **.

Extended Information: **Regular Investment.

Full name: regular fixed investment**) refers to the investment of a fixed amount (such as 500 yuan) at a fixed time (such as the 8th of each month) to a designated open**.

, similar to the bank's lump sum deposit and withdrawal method. **Regular investment is known as lazy financial management, and its value is due to Wall Street.

There is a popular saying: "It is more difficult to accurately step on the market than to catch a flying knife in the air." ”

Basic concepts. **Automatic Investment Plan (AIP) is known as lazy financial management, and its value is due to a saying circulating on Wall Street: "It is more difficult to accurately step on the market than to catch a flying knife in the air."

If you adopt the method of buying and selling in batches, you can overcome the defect of only choosing one point in time to buy and sell, and you can balance the cost and make yourself invincible in the investment, that is, the regular investment method.

Generally speaking, there are two types of investments, namely single investment and regular fixed amount. Due to **"Fixed-rated casting.

The starting point is low and the method is simple, so it is also called "small investment plan" or "lazy financial management".

Relative to regular investment, one-time investment income.

It can be high, but so is the risk. Due to the avoidance of the influence of investors' subjective judgment on the timing of entering the tomb, the risk of regular investment is significantly reduced compared with ** investment or ** single investment chasing high and killing down.

**Regular fixed investment has the characteristics of similar to long-term savings, which can accumulate a lot, spread the investment cost evenly, and reduce the overall risk. It has the function of automatically increasing the weight on dips and reducing the size on highs, no matter how the market changes, you can always get a relatively low average cost, so regular fixed investment can smooth out the net value.

peaks and troughs, eliminating the volatility of the market. As long as there is an overall growth in the selection, investors will get a relatively average return, and they no longer have to worry about the timing of entering the market.

Regular investment method. **The method of automatic investment can be completed through the automatic investment agreement and manual operation.

Both methods have their advantages and disadvantages:

Regular investment agreement: through the agreement, the bank will deduct the money at regular intervals, which is convenient and easy to operate, and the defect is the first company.

Once the subscription is suspended, it will lead to the interruption of the ** regular investment plan; In addition, it is only one price per day, which lacks flexibility. Of course, for most people, there is only one unknown on the day**, which reduces the trouble of choosing again;

Manual operation: Generally, there will be no interruption on the trading day, only in dividends and ex-rights.

In the event of a major announcement, the trading will be temporarily suspended. On the other hand, the selectivity of the day is strong, suitable for people with certain experience, and the disadvantage is that you need to bother, remember to operate in the field regularly.

After a ** buys, it goes to **, and buys it again at a low level, which spreads the average cost, which is to dilute the cost price.

Zhang San bought 100 shares at 10 yuan, if he didn't count the handling fee, his cost price should be 10 yuan (in fact, it should be a little more than 10 yuan, in order to simplify the hail number, ignore the handling fee), and later fell to 9 yuan Xiang was aggressive, he had to buy 100 shares, and the holding cost was reduced at this time, if the position was replenished at this time 200 shares, the cost was reduced to, and so on, that is, the stock price ** after the replenishment can be amortized at low cost.

Dilution in the ** market refers to a corresponding decrease in the profit allocated to each share due to the issuance of new shares, etc. Earnings per share (diluted) = net profit Return on average equity = net profit Net assets at the end of the year; Return on equity (diluted) = net dry profit Annual average net assets.

For example, the original 100 million shares, the profit of 30 million yuan, the profit per share, now the additional issuance of 20 million shares**, the share capital immediately increased to 100 million shares, and the additional capital investment company can not immediately have the corresponding profits, or the profit is still 30 million or slightly more, such as 31 million yuan, divided by 100 million shares, the profit per share has declined, that is, diluted.

If you earn a piece, you are the only one, then you take a piece, if your brother-in-law just comes and asks for dividends, then you are less, this is the simplest way to say, haha

Hello classmates, I'm glad to answer for you!

The word you are talking about is one of the professional vocabulary, and mastering the professional vocabulary can make you feel like a fish in water in the learning of the industry, and the translation and meaning of this word are as follows: the reduction of earnings per common share. The issuance of additional shares of common stock or the conversion of convertibles** may result in dilution or impairment.

Gordon wishes you a happy life!

It is to reduce costs and losses by making price differences.

For example, if you buy **100 shares for 2 yuan, and then buy the same **100 shares for 1 yuan, then your cost is (2 100 + 1 100) 200 = yuan, so your cost will drop by five cents.