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

Question

Quizplus · Accepted Answer

If there is certainty regarding costs, any changes in revenue will directly impact the operating profits and cash flows, which will, in turn, result in volatility. As a result, the volatility in pretax operating cash flows and accounting operating profits will be driven entirely by changes in revenue and operating leverage.

If There Is No Uncertainty Regarding Costs, Volatility in Pretax