Capital Structure And Profitability Relationship For Ftse Firms - Free Essay Example

Sample details Pages: 13 Words: 3904 Downloads: 4 Date added: 2017/06/26 Category Statistics Essay Did you like this example? The capital structure of a firm has long been a much debated issue for academic studies and in the corporate finance world. It is the way a firm finances its assets through some combination of equity, debt, or hybrid securities the composition or structure of its liabilities. In reality, capital structure may be highly complex and include various sources. Don’t waste time! Our writers will create an original "Capital Structure And Profitability Relationship For Ftse Firms" essay for you Create order The question whether capital structure affects to the profitability of the firm or it is affected by profitability is crucial one. Profitability and capital structure relationship is a two way relationship. On the one hand profitability of firm is an important determinant of the capital structure, the other hand changes in capital structure changes affect underlying profits and risk of the firm. Traditionally it was believed that the debt is useful up to certain limit and afterwards it proves costly. There is an optimum level of capital structure exist up to that level increasing debt will improve profitability, beyond that it will reduce profitability. In 1945, Chudson carried out an extensive study that implies the possibility of a relationship between the capital structures practised by a firm with its profitability. The question he endeavours to answer was that, à ¢Ã¢â€š ¬Ã…“In what way does the structure of assets and liabilities of a firm reflect the kind of industry in it is engaged, its size and level of profitability?à ¢Ã¢â€š ¬? In 1958 Merton Miller and Franco Modigliani in their famous Miller-Modigliani (MM) propositions put forward the net operating income approach of and demonstrated that the capital structure is irrelevant in a perfect market. It states irrelevant of capital structure in a perfect market to its value, hence, how a firm is financed does not matter. The MM propositions forms the basis for modern thinking on capital structure, though it is generally viewed as a purely theoretical result since it is based on perfect market assumptions those are not prevailing in practice. The matter of capital structure has gained much interest and controversy, since the MM Propositions which assert that the value of a firm is independent of its capital structure. The hypothesis proposed by MM created tidal waves in the corporate finance academia. Different theory such as packing order theory and agency cost theory were proposed. Various aspects of capital structure have been put to test and researched by so many researchers. The question is if the capital structure is really irrelevant in a real market and whether a companys profitability and hence value is affected by the capital structure it employs? If not, why capital structure is relevant and which factors make the leverage matter? Apart from profitability, some other factors such as bankruptcy costs, agency costs, taxes, and information asymmetry are considered in determination of capital structure. This study aims and attempts to extend the knowledge of capital structure and profitability relationship in listed UK companies. This analysis can then be extended to look at whether there is in fact an optimal capital structure exist the one which maximizes profitability and hence the value of the firm. 1.1 Context and relevance of the Study The topic of capital structure has been widely explored, though the study is relevant in the different time period and different context to find out whether the evidence concerning the capital structure issue and its various aspects are relevant to a given set of companies in a given period. Given this significance, current study attempts to understand and research on capital structure and its effect on profitability, of large firms in UK in the present context for a period of five years (2005 -2010). Thus, this study attempts to contribute to the research on capital structure in the recent period for large publicly traded companies on FTSE 100. 1.2 Research Objectives The present study is aimed at achieving one main and two secondary objectives. The main objective is to scrutinise the relationship between the capital structure and profitability of the large publicly traded UK firms and to ascertain whether a firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s profitability is related with its capital structure or not based on the empirical evidence generated. Secondly, this study would attempt and investigate to determine if any optimal capital structure exist among the sample of FTSE 100 listed companies. Third objective is to find out any trend of capital structure being exhibited by the UK companies. 1.3 Research Questions and Hypothesis The above objectives are translated in two research question. The main research question is that à ¢Ã¢â€š ¬Ã…“whether a firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s profitability is related with its capital structure or not?à ¢Ã¢â€š ¬? based on the empirical evidence generated. Hypothesis The first questions can be presented as following hypothesis. The present study shall be undertaken to evaluate this hypothesis based on the tests of the null hypothesis. H1: The profitability of a company is significantly correlated to its capital structure. H0: The profitability of a company is not significantly correlated to its capital structure. The secondary objectives of this study are translated in the determinant question regarding the optimality and trend of capital structure. The second question, will be discussed descriptively is that, Is there an optimal capital structure exists among or any trend of capital structure being exhibited by FTSE 100 listed companies? 1.4 Scope and Limitations of the Study Scope This is an academic study that would shed some light on the matter of capital structure which has been discussed in various different perspectives since the MM propositions. The significance of this study is that it further enhances the research into capital structure of listed firms in UK. Profitability and Capital structure relationship is an ongoing issue and its relevance may change in different period because of the changes in macro and micro economic factors. For practitioners and corporate finance people such as finance executives, controllers and directors of listed firms, this study is relevant and of much interest to get insight of the capital structure and whether it has any effect on the profitability. Limitations The findings of this study will be limited from the following aspects: This study included only FTSE 100 listed firms on the London Stock Exchange (LSE). Hence, its findings were not applicable for all the listed companies in UK. The sample of listed companies for this study included only firms with at least five years of financial data. Firms which are younger than five years or whose five year data could not be obtained will not be included in this study. The study excludes financial utility and other highly regulated industry to avoid any distortions in the result due to industry specific requirements. The cross sectional correlation and regression analysis will be performed using excel formula. CHAPTER 2 LITERATURE REVIEW The various capital structure theories are developed by corporate finance academia for analysing how a firm could combine the securities to maximise its value. The Modigliani and Miller (MM) proposition (1958) were introduced under the perfect capital market assumptions. It refers to an ideal market where there are no taxes at both corporate and personal level, no transaction costs, no agency costs as and managers are rational. It further assumes that investors and firms can borrow at the same rate without restrictions and all participants have access to all relevant information. Thus it provides conditions under which the capital structure of a firm is irrelevant to total firm value. Most of studies focus on the determination of capital structure i.e. to what extent each of the assumptions in the MM model contributes to the determination of the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s capital structure. Many theories such as the pecking order theory, the trade-off theory and the agency cost theory have been developed. Though much attention was not given to one major aspect of the capital structure, which is the impact of the value of the firm. The value comes from the future cash flow i.e. profit of the firm. Thus capital structure affects value of the firm through the profitability and hence there is a direct relationship between the capital structure and profitability of the firm. Capital Structure The term capital structure can be defined as: à ¢Ã¢â€š ¬Ã…“The mix of a firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s permanent long-term financing represented by debt, preferred stock, and common stock equity.à ¢Ã¢â€š ¬? (Van Horne Wachowicz, 2000, p.470) It can be defined as à ¢Ã¢â€š ¬Ã…“The mix of long-term sources of funds used by the firm. This is also called the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s à ¢Ã¢â€š ¬Ã…“capitalizationà ¢Ã¢â€š ¬?. The relative total (percentage) of each type of fund is emphasized.à ¢Ã¢â€š ¬? (Petty, Keown, Scott, and Martin, 2001, p.932) One of the exhaustive and inclusive description was given by Masulis (1988, pl): à ¢Ã¢â€š ¬Ã‹Å"Capital structure encompasses a corporationà ¢Ã¢â€š ¬Ã¢â€ž ¢s publicly issued securities, private placements, bank debt, trade debt, leasing contracts, tax liabilities, pension liabilities, deferred compensation to management and employees, performance guarantees, product warranties, and other contingent liabilities. This list represents the major claims to a corporationà ¢Ã¢â€š ¬Ã¢â€ž ¢s assets. Increases or reductions in any of these claims represent a form of capital structure change.à ¢Ã¢â€š ¬? However in this study, for the sake of simplicity, the capital structure will be analysed in term of debt and equity in line with other prominent capital structure studies and theories restricted to the debt equity mix. Profitability The term profitability is a very common term in the business world. It refers to an all round measurement and indicator for a firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s success. Profitability can be defined as the ability of a firm to generate net income or profit on a consistent basis. It is often measured by price to earnings ratio. The accounting definition of profit can be given as the difference between the total revenue and the total costs incurred in bringing to market the product i.e. goods or service. Hence, profitability had come to mean different things for different people. It can be defined and measured in several ways depending on the purpose. It is a generic name for variables such as net income, return on total assets, earnings per share, etc. though the simplest and common meaning of profitability is the net income. 3.1 Early Study on Capital Structure by W A Chudson One of the earliest comprehensive researches into capital structure of business firms was done by Chudson Walter Alexander (1945) on a cross section of manufacturing, mining, trade, and construction companies in the US from the year 1931 to 1937. Although it has been more than two third of a century, that study is still relevant today as before due to the seven questions which he endeavoured to answer. Out of those questions the relevant to this study are as follows. In what way does the structure of assets and liabilities of a given concern reflect the kind of industry in which a concern is engaged, the concernà ¢Ã¢â€š ¬Ã¢â€ž ¢s size and level of profitability? Are there any elements in the corporate balance sheet, either on the asset or the liability side, whose range of variation is so narrow that it is possible to speak of a à ¢Ã¢â€š ¬Ã…“normalà ¢Ã¢â€š ¬? pattern of financial structure? The questions posed by Chudson could be interpreted into the research questions pertinent to this study which are the relationship between profitability and capital structure, the existence of an optimal capital structure, and also the trend of capital structure being practised by a sample of firms. Chudsonà ¢Ã¢â€š ¬Ã¢â€ž ¢s research showed there were undisputable relationships between corporate financial structure and the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s profitability. As far as this study is concerned, Chudson had successfully proved the relationship between the profitability of a company with various capital structure variables including debt and equity capital. 3.2 M M Propositions In 1958 Merton Miller and Franco Modigliani in their famous Miller-Modigliani (MM) propositions put forward the net operating income approach of and demonstrated that the capital structure is irrelevant in a perfect market. Accordingly, the first Proposition holds that the value of a firm is independent of its capital structure. While the second proposition stats that when first proposition held, the cost of equity capital was a linear increasing function of the debt/equity ratio. As miller wrote subsequently these propositions implied that the weighted average of these costs of capital to a firm would remain the same no matter what combination of financing sources the firm actually chose. (Miller, 1988) In 1962, Barges tested and evaluated the MM propositions predominantly on the validity of the hypothesis that the cost of capital to the firms is unaffected by capital structure. According to Barges (p. 143): à ¢Ã¢â€š ¬Ã…“With respect to the empirical methods employed by MM it was found that, under very frequently encountered conditions, their methods will result in tests which are biased in favour of their propositions and biased against the traditional views.à ¢Ã¢â€š ¬? Barges had empirically proved the existence of some weaknesses in the research design and methodology of Modigliani and Millerà ¢Ã¢â€š ¬Ã¢â€ž ¢s study and concluded that (p. 147) à ¢Ã¢â€š ¬Ã…“Thus, on the basis of the evidence presented herein, the hypothesis of independence between average costs and capital structure appears untenable.à ¢Ã¢â€š ¬? Subsequently many studies were conducted with focus on the determination of capital structure and many theories were presented. 3.3 Profitability and Leverage theories Since MM propositions presented, many studies were conducted by releasing MM assumptions focusing on the extent to which each of the assumptions contributes to the determination of the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s capital structure. All these theories explains the relationship between leverage and the value of the firm and hence profitability of the firm. There are various theories in order to further explain this relationship. Nevertheless, these theories are actually based on asymmetric information (Myers, 1984), tax deductibility (Modigliani and Miller, 1963; Miller 1977), Bankruptcy costs (Stiglitz, 1972; Titman, 1984) and agency costs (Jensen and Meckling, 1976; Myers, 1977). Two main theories are the pecking order theory and the trade off theory. Pecking Order Theory The Pecking Order Theory is based on information asymmetry between management and investors. So, the stock price of a firm may not reflect correct value of the firm. Myers and Majluf (1984) and Myers (1984) suggest that management issue the security which is overvalued and therefore, undervalued firms tend to avoid issuing equity. They argue that in imperfect capital markets, leverage increases with the extent of information asymmetry. They provided theoretical support to Donaldsonà ¢Ã¢â€š ¬Ã¢â€ž ¢s (1961) findings that firms prefer to use internally generated funds as a financing source and resort to externals funds only if the need for funds was unavoidable. According to (Myers 1995), the dividend policy is à ¢Ã¢â€š ¬Ã…“stickyà ¢Ã¢â€š ¬? and the firms prefer internal to external financing. Firms prefer using internal sources of financing first, then debt and finally external equity obtained by stock issues. Therefore, asymmetric information models seldom point towards a well-defined target debt ratio or optimal capital structure. All things being equal, the more profitable the firms are, the more internal financing they will have, and therefore we should expect a negative relationship between leverage and profitability. The various studies such as Ross (1977), and Myers and Majluf (1984), Harris and Raviv, 1991; Rajan and Zingales, 1995; Booth et al., 2001have supported this relationship that is one of the most systematic findings in the empirical literature. Agency Costs Theory The Agency Costs Theory (Organizational Theory of Capital Structure) emphasize that capital structure was influenced by conflicts between shareholders and managers, and between debt holders and equity holders. Major study into this area was done by Jensen and Meckling (1976) that showed managersà ¢Ã¢â€š ¬Ã¢â€ž ¢ natural tendency to extract too many perquisites and stresses on self-interested behaviour. Obviously, agency costs would increase as the managersà ¢Ã¢â€š ¬Ã¢â€ž ¢ personal ownership stake in the firm decreases. This supplied an argument for debt financing and against à ¢Ã¢â€š ¬Ã‹Å"publicà ¢Ã¢â€š ¬Ã¢â€ž ¢ equity which was contributed by non management investors who cannot monitor management effectively. Fama and Miller (1972), using agency cost theory, proved that leverage was positively associated with firm value. Firms with longer credit histories would have lower cost of debt. The Trade of theory The trade-off theory is based on the considerations of benefits and the costs of debt. This theory argues that firms optimise their capital structure by trading the tax deductibility of interests, bankruptcy costs, and agency costs. This theory is consistent with traditional approach of capital structure. This theory leads to an opposite conclusion. Accordingly if the firms are profitable, they should prefer debt to benefit from the tax shield. Further as the past profitability is a good proxy for future profitability, profitable firms can borrow more because the likelihood of paying back the loans is greater. However after a certain level of leverage, the profitability and the value of the firm will reduce due to interaction of bankruptcy costs and agency costs. 3.4 Various Studies on Capital Structure As the issue of capital structure gained prominence and interest, a number of studies had been done over the years to explore the relationship between capital structure and a firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s various characteristics e.g. growth opportunities, non-debt tax shields, firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s volatility, asset systematic risk, asset unique risk, internal funds availability, asset structure, profitability, industry classification, and firm size. This study is concerned particularly on the relationship between capital structure and profitability. Most of the studies had concluded that capital structure measured by debt/equity ratio had an inverse relationship with profitability measured by Return on Investment (ROI). Professor Myers of MIT had written in 1995 that à ¢Ã¢â€š ¬Ã…“the strong negative correlation between profitability and financial leverageà ¢Ã¢â€š ¬? is one of the à ¢Ã¢â€š ¬Ã‹Å"most striking facts about corporate financingà ¢Ã¢â€š ¬? (p.303). It is worthy to mention here that the aforesaid studies were the most comprehensive ever carried out in the US. One significant research was conducted by Bradley, Jarrell and Rim (1984) using Ordinary Least Squares method to analyze the capital structure of 851 industrial firms over a period of 20 years (1962-81). They concluded that an optimal capital structure actually existed as proposed by finance theorists. Bradley, Jarrell and Kimà ¢Ã¢â€š ¬Ã¢â€ž ¢s findings were supported by El-Khouri in 1989 who studied a sample of 1,040 Companies in US from 27 different industries covering a period of 19 years (1968-86). El-Khourià ¢Ã¢â€š ¬Ã¢â€ž ¢s major findings were that there exists an optimal capital structure, and profitability was significantly but negatively related to capital structure. 3.5 Rajan and Zingalesà ¢Ã¢â€š ¬Ã¢â€ž ¢ Study Rajan and Zingales (1995), in their study of determinant of capital structure find that profitability is negatively or inversely related to gearing consistent with Toy et al. (1974), Kester (1986) and Titman and Wessles (1988). Given, however, that the analysis is effectively performed as an estimation of a reduced form, such a result masks the underlying demand and supply interaction which is likely to be taking place. More profitable firm will obviously need less borrowings, although on the supply-side such profitable firms would have better access to debt, and hence the demand for debt may be negatively related to profits. Most of such studies were conducted in US using local companies and hence represents financing and profitability relationship in US economy and might not be applicable in other countries around the globe. Some of the studies conducted in UK as well though changing business and economic environment and time period may have their impact on such capital structure and profitability relationship. Further as discussed earlier much attention was not given to one major aspect of the capital structure, which is the impact on the profitability and hence the value of the firm. So understanding the effect of capital structure on the profitability and hence the value of the firm in the current economic and business environment is the main motivation for this study. CHAPTER 3 RESERCH FRAMEWORK I intend to use two major sets of variables (Ratios) i.e. Debt and Profitability to ascertain the relationship between the capital structure and profitability. The first set includes Gearing ratios Debt/Equity Ratio and Debt Ratio. The other set includes profitability ratios Return on Equity, and Return on Assets. The variables will be analyzed using the descriptive/time-series Correlation and regression technique. 2.1 Data Sample The data used for the empirical analysis will be derived from Hemscott database contains balance sheet, profit and loss and certain Key Ratio information for FTSE 100 companies in UK. For the purposes of this dissertation, I expect to utilise this data to obtain the required variables for all non-financial companies. 2.2 The Model and Research Methodology The following model outlines the framework for research. It consist two major components i.e. the profitability of a firm as the dependent variables and the capital structure of a firm as the independent variables. The arrow pointing to the right indicated the expected direction of causality. However profitability and capital structure relationship is a two way relationship. DEBT RATIO ROE DEBT/EQUITYRATIO ROA The model gave the foundation for analysis which was to explain the relationship among the two main groups of variables. In as much as possible, variables will be selected on the basis of the literature being reviewed. Thus, while this study is expected to give exciting results, there will be direct ties to earlier studies although may reflect the changing requirements of the time. One prominent issue here is the direction of the causality in the model. This research is based on the notion that the capital structure being practised by a firm would affect its profitability. This particular cause-and-effect relationship had been proved in various studies as found in the literature being reviewed. Though it should be kept in mind that there were a number of researchers who had argued that it was profitability which would influence the capital structure (Chudson 1945, Lamothe 1982, Bowen, Daley and Huber 1982). However, it is not within the scope of this study to determine the direction of causality in this particular relationship but rather to focus on the significance of such a relationship. 2.3 Variables In the first instance, great care was taken to define the dependent and independent variables to be used in the descriptive, co variance and regression analysis. As there are several alternative measures of profitability and gearing, only relevant measures are chosen for this cross-sectional analysis. Dependent Variable Profitability is dependent variable in this analysis and two measures of profitability employed in this analysis are Return on Equity (ROE) and Return on Assets (ROA). ROE is the return on equity and is measured as earnings before tax (EBT) divided by ownersà ¢Ã¢â€š ¬Ã¢â€ž ¢ capital or equity. ROE = EBT/EQUITY ROA is return on assets and is measured as earnings before interest and tax divided by total assets (Titman and Wessels, 1998; Fama and French, 2002 and Flannery and Rangan, 2006). The ratio of earnings before interest and tax (EBIT), to the book value of total assets (TA) ROA = EBITDA/TA Independent Variables Gearing Ratio represents capital structure. Therefore, in order to examine the sensitivity or otherwise of their cross-sectional results to the profitability following two ratios are used in this analysis and defined as: Debt to Total Assets: This is a simple ratio of total debt to total assets DEBT RATIO= TD/ TA Debt to Equity Capital: This is the ratio of total debt to capital, with the capital calculated as total debt plus equity, including preference shares. DEBT/EQUITY RATIO = TD / (TD + ECR + PS) PS the book value of preference shares. Research Plan and Implementation Schedule Research work starts from week beginning from October 4, 2010 and is expected to complete in 10 weeks time. The work is scheduled as follows. Research Plan Week Star Date : 04-10-2010 Week 1 2 3 4 5 6 7 8 9 10 Background reading and literature review X X Research design and plan X Choice of methodology X Gathering data X X X Data analysis and refine X X X Writing up draft X X X Editing final document X X Produce final document X Document passed to supervisor to read X Resources I intend to use following resources Hemscott database for data collection. MS Excel for analysing data. University of Wales online library, internet, and some books on finance.

debate against war with Iraq Essay - 551 Words

Debate Side: Against Topic: War I.nbsp;nbsp;nbsp;nbsp;nbsp;One page response a. Debate points II.nbsp;nbsp;nbsp;nbsp;nbsp;Two page response a.nbsp;nbsp;nbsp;nbsp;nbsp;Introduction b. Debate points c. Conclusion War is defined for some as an armed conflict between two nations over a disputed situation, and is needed when there is nothing else that can be done. A natural occurrence that repeats it’s self through out time. While others feel that war is an unnecessary dispute, that leads to nothing but destruction, and that there are always other solutions that can be made; that peace should come before all else. I am on the most part against this war with Iraq. I feel that it is pointless. The reasons we are†¦show more content†¦Also funding for this war is taken away the funding for education, and environment and health care benefits are being cut to pay for this war. Is this war really more important than the education of our children, or the welfare of the environment and citizens? It is estimated the cost of war with Iraq is already $60-$100 billion with ongoing billions for occupation and rebuilding Iraq. War with Iraq will not make us any safer. If they are believed to have nuclear weapons are we not giving them a reason to use them? Also many of our allies do not support us in this war. Our European allies have urged us to work through the United Nations instead of rebellion against their decisions. If we pull through this without the help of our allies we are isolating the United States from the rest of the world and shattering the trust other nations have in us. In the end we our making ourselves out to be egotistic control freaks. Through war we are not making ourselves look any better. We are no more powerful or thought to be valiant. Instead we are making more enemies and losing valuable allies, and lives. We are risking the lives of young American soldiers and innocent civilians who are caught in the cross fire of war. 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Avalanch Essay Research Paper Each year in free essay sample

Avalanch Essay, Research Paper Each twelvemonth in the U.S. alone 1000s of avalanches occur. The avalanches happen at many ski resorts, and sometimes killing and wounding people who went out of bounds or did non listen to the teachers. The avalanches besides happen on other mountains that people are boosting and mounting on the mountains. In the Cascades every twelvemonth tonss of avalanches occur with out doing any harm to anything. This twelvemonth entirely in North America 32 people have died due to avalanches. Avalanches don # 8217 ; Ts have to go on on a mountain. They can go on were of all time there is snow lying on land of sufficient angle. In recent old ages at that place have been accidents with avalanches on the English Lakes, the Cheviots and the Pennines and Wales ( Marchant 52-53, About Avalanches ) The lifting sum of backcountry skiing and snowboarding is non good. That it because where they ski, the snow is non safe and is easy caused to skid. On Mount Baker in Washington a skier was 15 pess out of bounds and was covered by a 15-foot moving ridge of snow. ( Martinet 52-53 ) Many things can and will do avalanches. Many factors cause avalanches. Weather is the most of import factor in finding whether avalanches are likely, and the rating of the snowpack is wholly dependent on this. The snowpack depends on the conditions. One twenty-four hours it could be warm out, warming the snow to 0 grades. Then the following twenty-four hours could 10 below. That would do the snow icy on top and sort of sugary underneath. That would be a likely job for a tramp. They could do some snow to skid and it would travel fast. It would travel fast because the sugary snow Acts of the Apostless as ball bearings doing the crusted bed slide in large sheets destructing things. An other conditions factor is a storm. It is said that 90 % of all avalanches occur during blizzards. Other conditions factors besides affect avalanche activity but non every bit much as storms and temperature. Terrain besides has an affect on how avalanches are caused. If the land is bouldery underneath the snow it is non a likely that an avalanche will get down because the stones will keep the snow between themselves and sort of battalions the snow tighter. When the stones are covered surface avalanche activity is unhampered. The terrain besides consists of the Slope. When there is a incline between 25 and 45 grades, you are more likely to hold a big slab avalanche. The snowpack is a really of import factor in finding whether an avalanche may happen. When look intoing the snow beds there is no demand to delve to the land degree, merely the first moderately thick bed of neve ( refrozen old snow ) . Smoothing the back wall of the cavity and examining with a finger all the manner down may so place the snow bed. Look for these characteristics. Adjacent beds of different hardness, really soft beds, H2O beads squeezed out of a sweet sand verbena made of any bed, beds of ice, beds of graupel ( rounded to a great extent rimmed pellets ) , air space, and beds of loose uncohesive grains. The people on the mountains cause the avalanches excessively. They cause the avalanches by interrupting the snow by doing loud noises, by skiing, snowboarding and snowmobiling besides. All the carving in the snow by the people and their toys causes interruptions in the snow and that creates a really likely factor for a slab avalanche. People all do other things that might non thing will do an avalanche. ( About Avalanches ) The physical features of an avalanche can be broken down to the types of avalanches and what they do. One avalanche is the slab avalanche. This sort of avalanche is big slabs of difficult snow skiding on the surface of the graupel. The graupel works a ball blackball for the slab to skid on. Leting the snow to make velocities of two hundred stat mis per hr. The slab of snow is frequently difficult and destroys everything in its manner. The slab avalanche has a break of mistake line where it breaks off from the other snow and starts to skid. The mistake can be caused by about anything, like a skier, snowboarder or snowmobiler. The borders are perpendicular to the mistake and will skid perpendicular with the mistake. ( About Avalanches ) A surface avalanche is another characteristic of avalanches. This type of avalanche is started on the surface and merely maintain skiding down picking up velocity and more snow burying things in its manner. The surface avalanche is non every bit bad as a slab avalanche because it does non hold the big slabs of difficult ice and snow skiding on top crashing though things. The snow in avalanches moves really fast down the hills. The snow averages a velocity of 150 # 8211 ; 200 stat mis per hr! That is really fast particularly when there likely about 15-foot wall of snow coming down the mountain at 200 stat mis per hr. The snow can merely make that velocity when there is sufficient angle on the mountain. ( About Avalanches, Encarta 98 ) Avalanches harm belongings. The fast moving snow takes out trees and houses in it manner. Not much can halt the snow except itself, because trees and house Don # 8217 ; t stand a opportunity against the fast difficult snow. In the image below you can see that the snow will destroy the land by rending the trees down and thwacking them into the house. That besides moved the house off its foundation and pushed it for a twosome hundred pess before halting the slide. ( Marchant 52-53, About Avalanches ) This twelvemonth entirely 70 people have died from avalanches in Europe. Mostly all of them were skiers, snowboarder and tramps. This twelvemonth in North America 32 people have died. Most of them were snowboarders, skiers, tramps and possibly a snowmobiler. The ground most of the people are killed in the avalanches are that they are skiing or snowboarding and wear # 8217 ; t remain in bounds and travel out in the backcountry were no 1 knows where they are and if they were in the avalanche or non. So most of the people in the backcountry that are caught in the avalanches died of being beat around by the snow and hitting things or dice of hypothermia. So when traveling in the backcountry Don # 8217 ; t travel entirely and put in an avalanche sender. The sender sends out a signal for people can happen you when you are buried in the snow in the center of no where. So to avoid deceasing while skiing and snowboarding in an avalanche stay out of the backcountry and remain on the marked g roomed trails. ( Marchant 52-53, About Avalanches ) How Avalanches are caused. There are four chief grounds that avalanches are caused. One chief cardinal factor is the conditions. 90 % of avalanches are caused during blizzards. The conditions in most of import factor in finding whether an avalanche will go on, following to the rating of the snow. There are many variable in the conditions that have an affect on the avalanche activity. For case, if there is a SW air current of 25mph is indicated with freezing temperatures and snow is know to be lying so it may be assumed that some avalanche hazard will be constructing on the NE facing inclines. The information provided on the temperature, wind velocity and way frequently enables people to do utile anticipations before go forthing place. When boosting after floating and storms do watch out for valances they look like this. This is a jeopardy and can be avoided if you are watching where you are mounting and cognize the land reasonably good. The diagram shows the possible avalanche break line, so seek to give them a broad position to forestall get downing an avalanche. Another Factor in avalanches is the terrain. The terrain consists of the incline profile and the land surface. The incline profile consists of the type of inclines, and which 1s are more unsafe. The most big slab avalanches run on the inclines between 25 and 45 grades. This scope includes the mean angle of coire backwalls and attack inclines to crags. The convex inclines are by and large more risky than unvarying or concave inclines. The point of maximal convexness is a frequent site of tenseness breaks, with the release of the slab avalanches. Ridges or buttresses are better picks than unfastened inclines and gullies when avalanche conditions prevail. The crest of the mountain ridges is normally protected from avalanches, while mounting in state of affairss, stone belays on ribs and buttresses can frequently supply security. ( About Avalanches ) Snowpack is another factor in doing avalanches. When there is equal visibleness, snowpack observations can get down from the wayside. The grounds of recent avalanche activity, chief snow accretion, and fresh burden snow and drifting can frequently be noted from below. When continuing up the mountain take note of pes incursion, valance build up, easiness of release of little slabs and consequence which localized wind forms may hold had on the slab. To acquire an accurate note on the snow beds you can delve a cavity. Do non delve your cavity on the chief incline, but on a little safe incline of similar orientation, it is safer. There will no demand to delve to the land degree, merely down to the first neve. ( Refrozen old snow ) Expression for these undermentioned characteristics. ? Adjacent beds of different hardness. ? Very soft beds ( fist penetrates easy ) . ? Water drops squeezed out of a sweet sand verbena made from any bed. ? Layers of ice. ? Layers of Graupel ( Rounded to a great extent rimmed pellets ) Acts as ball bearings in the snow battalion. ? Feathery of faceted crystals. ? Layers of loose, uncohesive grains ? Airspace. Any of the above might be the beginning of a unsafe failing in the snowpack. You should execute this trial every clip before you climb or hiking. This will assist you to do an educated hazard appraisal. The Lee inclines should be avoided after storms of heavy drifting. Their location will evidently vary harmonizing to weave way, and will include sheltered side of ridges and tableland rims. Peoples on the mountain are truly the chief cause of the avalanche. Most of the people on the mountains are skiers, snowboarders, and climbers. The skiers and snowboarders make large cuts in the snow when they are turning traveling down the mountain. The channels from the people can and make do the snow to interrupt apart and do slab avalanches. The people do others things on the mountain, like cause loud noises and other things that they merely don # 8217 ; t r ealize they did to state others what might hold caused the avalanche. The truth is that most of the avalanches are cause by the victims. It is said that 90 % of avalanches are cause by the victims. ( About Avalanches ) There are things a individual can make to forestall being caught in an avalanche. One thing is maintain a close ticker on the conditions and acquire the prognosis before you go mounting. Do non mount or ski if there is a storm coming or it is floating. Be watching the temperature because that makes the snow loose or difficult. If the snow gets to 0 grades o twenty-four hours it will be loose and soft. Then the following twenty-four hours the snow will be difficult and will skid in a large slab if breaks off. The loose warm snow would be more likely to give manner than the difficult snow so watch for that. The air current is another factor. If it is floating, the snow will be unstable because there will be new snow being placed in different topographic points, and the snow will non hold clip to pack itself before you climb on it. Don # 8217 ; t ascent when there is floating and stormy conditions. The air current will besides drop the temperature existent fast when mounting or skiing ticker for the warm snow turning to ice. The snow beds besides will assist you forestall being caught in an avalanche. If you follow the checklist of beds that were said earlier you would hold a good thought of the sort of hazard you would be taking, if there were any of the dangers in the beds like that were said. If you head those warning marks of the snow beds you should be good in that country. Check the terrain. When look intoing the terrain expression for the type of incline on the mountain you will be mounting or skiing. What is underneath the snow? Is are at that place stones underneath the snow is at that place, cavities that bead out for a couple pess but have a thin crust over them. Ask a twosome locals who have climbed the mountain before, and see what hold to state you about the terrain. ( About Avalanches ) If caught in an avalanche you should seek to make these things. The first thing you should seek to make is seek to detain your going with the traveling snow. You could make that by delving you mounting ax in to the snow or one of your ski poles, or seek keeping on to a tree or stone in you can. Besides tie a rope your organic structure, if you have on with you, so bind the other terminal to a tree or stone, this manner you will non acquire carried really far down the mountain. ( About Avalanches ) When you are being carried off by the snow shriek, yell, cry, merely seek to do a batch of noise for people will be able to hear you and possibly find be able to turn up you a batch faster. By making that others can acquire an thought of where you might be on the mountain. ( About Avalanches ) If you are near the break line attempt to run or leap up incline above the break line. You could besides seek to leap on a difficult slab and seek to stay on the top of it for a piece, until the slide slows down. Get rid of your cogwheel, like your pokes, skis etc. This will assist you steer better in the snow and will assist your senses a little more. Try turn overing like a log with the snow it will assist you be able to travel around a small better. You can seek a swimming gesture because it sometimes helps you steer a little more. But every what you do, seek to remain on the top of the traveling snow, it will assist salvage your life if everything else does non work. ( About Avalanches ) If you get buried in the snow attempt to make some of these fast ones or manoeuvres. One thing keeps your manus in forepart of your face and attempts to clear and keep an air infinite. This will assist you be able to take a breath better. Besides try to hold a infinite near your thorax for enlargement, when you are take a breathing. You should avoid terror and attempt and conserve your energy. Most likely your comrades are likely looking for you. So stay composures ; wear # 8217 ; t waste all of your strength on seeking to acquire out from where you are. If you try and acquire your manus out above the surface, other wise attempt and remain still, and seek to take a breath usually. If you witness an avalanche entombment you should continue by making the followers. ? Observe the victim # 8217 ; s advancement, and if possible grade the point of entry and point at which last seen. ? Check for farther avalanche danger. ? Make speedy hunt of the dust surface, expression for marks of the victim and listen for sounds. ? Make a systematic hunt, examining the dust with axes or poles. ? Send for aid. ? Keep seeking until aid arrives ? Remember, you are the victim # 8217 ; s merely existent opportunity of unrecorded deliverance. ( About Avalanches ) How people are seeking to command avalanches, so that they can be prevented. One manner they are commanding avalanches is that they fire missiles in to the mountains and do small slides. The small slides move a batch of snow down the hill, so when there is a existent avalanche there is non every bit much snow traveling down the hill at one time. They besides use dynamite and other weaponries to make the same. Anther thing they do is, they put up cyberspaces to command the velocity and sum of snow traveling down the mountain all at one time. The cyberspaces hinder the snow # 8217 ; s impulse and sum. That helps cut down on harm done to belongings and woods. ( Ready, Aim, Fire, 148 ) Here is what has happened to a twosome of people and what they did while being caught in an avalanche. Mitch Edwards was snowmobiling in the winter of 1998-1999, when was driving in some pulverization and got stuck traveling up hill. He knew the avalanche danger was high so he was seeking to maneuver clear of it. But while he was stuck and seeking to acquire out, one of his friends yelled avalanche. So he got on his 97 t-cat believing the snow would travel around him and his sled, but he was incorrect. The minute the snow hit his sled it flipped him and his sled all over the hill. He was seeking swimming gestures through snow like you are supposed excessively, while his sleigh was acquiring flipped around. When it eventually stopped his pess were pinned under his sled and his whole organic structure was covered as if buried in cement. The snow was up to his oculus degree, and he could non travel an inch. All that was seeable of his snowmobile was the tip of his ski. Fortunately his friends had seen the whole thing happen. He said after some shoveling he and his snowmobile started to emerge. He besides said every one in his group wears avalanches senders. He said if you don # 8217 ; t have one and were buried like he was and no 1 was at that place to happen him he could still be at that place he said. By the manner, his sled started on the first pull. ( Edwards, 16 ) ( Mitch Edwards and His 97 T-cat ) Andrew Murr and a group were boosting on Mount Rainier when it all started with one word, SNOW. When he looked up he saw a 150 moving ridge of snow coming down at him and 9 other climbers. Their usher tried to hustle them to safety, but they were swept off. Gregg dug his ax into the snow but nil would keep. He told himself he was deceasing. Then his rope caught a rope and brought him to a arrest. A lady that was on his same rope came to a halt over the border of a 500-foot drop underneath a waterfall of glacial overflow. As it turned out all but one of the 10 climbers lived. Patrick Nestler, was hanging beneath the lady even farther down the rope. He died of hypothermia, because he was pelted with 35-degree H2O for about 2 hours. The climbers had been mounting when the temp was a turn 75 grades and the snow merely gave off because of the snow being to warm they figured. ( Murr, 34 ) A device that skiers and snowboarders can have on to assist salvage them in an avalanche, it is called the AIR BAG. It is a 1 or 2 fictile balloons that people can have on on their dorsum. The contents inside are 150 liters of a mixture of N and air. The skier or snowboarder triggers this by drawing a small twine, that so causes a chemical reaction and the balloons fill. What the air bag does is really two things. One thing is that it decreases denseness of a homo, which is much higher than the one of the snow. ( From 1,000 fg/m3 to about 400 kg/m3. ) ( Air Bag ) The 2nd thing it does is do the skier go a bigger atom. This helps the victim stay on or shut to the top of the traveling snow. Because smaller pieces stay under the surface, like a human by them self with out an air bag, would be under the surface the whole and likely neer come uping. The avalanche seams to screen the large pieces and set them on top, and the air bag makes the individual bigger, it keeps them on the top. ( Air Bag ) During 1991-1997 12 people with air bags survived the accident. But you can non be certain you will be wholly buried. In instances of the individual being buried the balloon remains on top of the surface doing it easier to happen the individual. In decision avalanches can go on to any 1 who takes the hazard and there are many factors of enchantress can do them to go on. The victim is one of the chief causes that the avalanche starts in the first topographic point. So when traveling hike or skiing look into the factors. Look at the conditions, acquire an drawn-out prognosis, as some locals about the avalanche activity on that mountain this twelvemonth. Check the snow beds, and merely wear # 8217 ; t believe it can # 8217 ; t go on to you. Remember avalanches can happen where there is sufficient angle and plenty snow to skid. # 8220 ; About Avalanches # 8221 ; The Scots Sports Council. Edwards, Mitch. # 8220 ; I survived an Avalanche # 8221 ; Pride, Vol. 17 December 1998, p16 Fallow, Allan. # 8220 ; Avalanche # 8221 ; National Geographic World, Vol. 257 January 1997 p2-6 Finkel, Michael. # 8220 ; Six Feet Under # 8221 ; Skiing, Vol. 46 October 1993 p28 # 8220 ; Good Avalanches are Essential. # 8221 ; Discover, June 1995, p18 Grogan, David # 8220 ; Buried Alive # 8221 ; Peoples Weekly Vol. 37 January 20, 1992 P 36-37 Marchant, Valelie. # 8220 ; Steep Deep and Deadly # 8221 ; Time March 8th, 1999 p52-53 Murr, Andrew. # 8221 ; The Trail Just Gave Out # 8221 ; News Week Vol. 131, June 22nd 1999, p34 # 8220 ; Ready Aim Fire, its Avalanche Control Season # 8221 ; Sunset Vol. 190 January 1993, p148 # 8220 ; The Air Bag # 8221 ; hypertext transfer protocol: //www.avalanche.med.tu-muenchen.de/sk: 8e.htm