Since the 1980s, U.S. publicly listed firms almost doubled their average cash holdings. In line with a precautionary motive, this process is often associated with an increase in firms' riskiness. In fact, not only sales volatility has increased, but also operating costs volatility has increased by less, so that costs became relatively more fixed over time, i.e. an increase in operating leverage. This article aims at disentangling the contribution of increased operating leverage, which captures the rigidity of the cost structure, in the increase in cash holdings. First, in a simple trade-off model, operating leverage is shown to exert a positive influence on optimal cash holdings, by increasing the volatility of future profits. Then, using data of U.S. publicly listed firms, I document the positive relationship between operating leverage and cash holdings, further corroborated by additional evidence that conforms to the model's predictions, and conclude that its contribution in the increase in average cash holdings is at least as large as the contribution given by increased sales volatility.