
84 The Financial Times Guide to Corporate Valuation
In order to estimate the company-specific risk, it is necessary to analyze its
fundamental business activities and the factors critical for the company’s
success. These factors are identical to the company’s value drivers, which
are fundamental to predicting future cash flows. In Chapter 7, ‘Underlying
analysis and key value drivers’, we present a model for analyzing the com-
pany’s activities, its environment and its key value drivers.
When using ECE, it could be useful to perform a sensitivity analysis in
order to check that the valuation is reasonable. This involves, for example,
valuing ...