Equity dilution refers to the reduction in the percentage ownership of a shareholder as a result of a new issuance of shares within a company, which rank equally with the existing voting shares.
The if-converted method is a technique used in the USA for determining the dilution of convertible securities that are not common stock equivalents in the calculation of fully diluted earnings per share. The assumption is made that the securities are converted at the beginning of the year or the issue date if later.
