Operational (operating) leverage
Operating leverage is a cost-accounting formula that measures the degree to which a firm or project can increase operating income by increasing revenue. A business that generates sales with a high gross margin and low variable costs has high operating leverage.
The higher the degree of operating leverage, the greater the potential danger from forecasting risk, in which a relatively small error in forecasting sales can be magnified into large errors in cash flow projections [Investopedia].
For example, a software company has substantial fixed costs in the form of developer salaries but has almost no variable costs associated with each incremental software sale; this firm has high operating leverage. Conversely, a consulting firm bills its clients by the hour and incurs variable costs in consultant wages. This firm has low operating leverage
Operating Leverage: What It Is, How It Works, How To Calculate. Investopedia. Retrieved from: https://www.investopedia.com/terms/o/operatingleverage.asp#:~:text=Investopedia%20%2F%20NoNo%20Flores-,What%20Is%20Operating%20Leverage%3F,costs%20has%20high%20o
Operating leverage definition. AccountingTools. Retrieved from: https://www.accountingtools.com/articles/operating-leverage