Step 1: Understanding the terms.
Wales per inch ($W$) represents the number of wales measured in the finished fabric after shrinkage. Fractional shrinkage ($S$) indicates the proportion by which the fabric dimensions reduce during finishing. Machine gauge ($G$) refers to the number of needles per inch on the knitting machine before shrinkage occurs.
Step 2: Relating fabric shrinkage to machine gauge.
Due to shrinkage, the wale density in the finished fabric increases. Therefore, the wale density on the machine must be lower than the final measured value. The relationship between machine gauge and finished wale density is:
\[
W = G(1-S)
\]
Step 3: Rearranging the formula.
To find the machine gauge, rearrange the equation:
\[
G = \frac{W}{(1-S)}
\]
Step 4: Conclusion.
Hence, the correct expression for machine gauge in terms of wales per inch and shrinkage is $\dfrac{W}{(1-S)}$.