Fully diluted share capital refers to the total number of shares that would be outstanding if all possible sources of conversion or exercise were utilized. In other words, it represents the maximum number of shares that could be in circulation if all convertible securities, share options, warrants, and other potential instruments that can be converted into ordinary shares were actually converted or exercised.
Here are some common components that contribute to fully diluted share capital:
Fully diluted share capital is important for investors and analysts because it provides a more comprehensive view of a company’s potential future share count, which can impact metrics like earnings per share and ownership percentages. It helps stakeholders understand the potential dilution of their ownership in the company if all these convertible securities and options were exercised or converted.
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