If there is no uncertainty about costs, volatility in pretax operating cash flows and accounting profits will be driven entirely by changes in revenue and operating leverage.

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When there is no uncertainty about costs, changes in revenue and operating leverage will be the only factors influencing volatility in pretax operating cash flows and accounting profits. This is because fixed costs will remain constant, and therefore the impact of changes in revenue will be amplified by the existing operating leverage, leading to changes in profitability. However, if there is uncertainty about costs, this can also lead to volatility in cash flows and profits, as unexpected fluctuations in costs can impact the bottom line.

If There Is No Uncertainty About Costs, Volatility in Pretax