Master the analysis of share dilution and its effects on a company’s valuation with our comprehensive Share Dilution Template. This free Excel resource guides you through calculating the additional shares that may be issued due to various dilutive events, such as employee stock options, restricted stock units, convertible bonds, and rights offerings.
What is Share Dilution?
Share dilution occurs when a company issues new shares, resulting in a decrease in the ownership percentage and value of existing shareholders’ stakes. Various events can lead to dilution, such as the issuance of employee stock options, restricted stock units, convertible bonds, or rights offerings. It is crucial for shareholders and investors to understand and quantify the dilutive impact on a company’s stock price and their investments.
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Steps for Using the Share Dilution Template
- Download the free Share Dilution Template.
- Replace the example numbers in the blue font color cells with your own figures from your company’s financial statements and dilutive security details.
- Add or remove line items as needed for your specific analysis by selecting the row, right-clicking, and choosing Insert or Delete.
- Verify that the formulas in the black font color cells correctly capture all line items, including any new ones you’ve added.
- Input the relevant details for each dilutive event, such as outstanding stock options, weighted average exercise price, current share price, principal amount of convertible bonds, conversion price, rights ratio, and issue price.
- The template will calculate the additional shares to be issued upon vesting of employee stock options using the treasury stock method.
- The template will determine the dilutive impact of vesting restricted stock units.
- The template will estimate the number of shares to be issued due to the conversion of convertible bonds, based on factors like principal amount, conversion price, and maturity date.
- The template will analyze the dilution caused by rights offerings, considering the rights ratio and issue price.
- Review the total diluted shares outstanding after accounting for all dilutive events.
- Analyze the potential impact on the company’s stock price and existing shareholders’ ownership stakes based on the diluted share count.
What You’ll Get with the Share Dilution Template
Our Share Dilution Template includes calculators and step-by-step guidance for:
- Employee Stock Options (ESOs): Calculate additional shares from vesting of employee stock options using the treasury stock method.
- Restricted Stock Units (RSUs): Determine the dilutive impact of vesting restricted stock units.
- Convertible Bonds: Estimate shares to be issued due to conversion of convertible bonds based on principal amount, conversion price, and maturity date.
Rights Issues: Analyze dilution caused by rights offerings, considering the rights ratio and issue price.
Download the Free Template
Enter your email in the form and download the free template now!