When revenue growth is increased from 9% to 20%, what other factor may significantly influence the DCF analysis?

When revenue growth is increased from 9% to 20%, operational changes become a significant factor influencing the DCF analysis. A substantial increase in revenue growth often implies that the company may need to make adjustments to its operational structure to support this growth. For example, higher revenue targets might necessitate scaling production, increasing workforce, enhancing supply chain efficiency, or investing in technology, which could affect overall operating margins and future cash flows.

These operational changes can impact both the expenses associated with generating the higher revenues and the level of additional capital expenditures needed to sustain that growth over the longer term. Therefore, how the company adapts its operations to handle more significant revenue has a direct effect on the cash flows projected in a DCF analysis, ultimately influencing the valuation derived from this methodology.

In contrast, factors such as shorter projection periods, discount rate reduction, and cash flow timing may have implications, but they do not directly correlate with the operational adjustments that accompany a sharp increase in expected revenue growth. Thus, when assessing DCF analysis after a significant revenue growth forecast change, focusing on operational adjustments is crucial.