Which area is NOT known to dilute Earnings Per Share (EPS)?

Earnings Per Share (EPS) is a critical metric in evaluating a company's profitability relative to its outstanding shares. Dilution refers to the reduction in EPS resulting from the issuance of additional shares. Options such as convertible bonds, convertible preferred shares, and "in the money" stock options can all lead to an increase in the number of shares outstanding when converted or exercised, thus diluting EPS.

In contrast, cash dividends do not have any effect on the number of shares outstanding. When a company distributes cash dividends to shareholders, it does not issue new shares; it simply reallocates its earnings to existing shareholders. Therefore, cash dividends do not contribute to the dilution of EPS, which makes this option the correct answer.

Understanding this distinction is crucial for financial analysis, as it highlights how certain financial instruments can impact shareholder value and perceptions of profitability.