This is the relationship between a firm’s fixed and variable costs.
Where fixed costs are high the firm is said to be highly geared, making it more sensitive to changes in sales than a firm with low gearing. For example if a firm makes sales of £100m and incurs variable costs of £10m and has fixed costs (which don’t vary with sales) of £80m, profit is £10m (£100m-£10m-£80m). Now let’s say sales rise by 10% to £110m. Variable costs can be assumed to rise to £11m (up 10%) and fixed costs to stay at £80m. Now the firm’s profit is £19m (£110m-£11m-£80m). So a rise of 10% in sales results in a 90% boost to profits thanks to the firm’s high operational gearing.