Obviously cash is liquid, so it gets valued at 100%. Accounts receivable should be largely collectible so no major discount is required. The temporary investments are mutual funds which were valued as of May 31, 2008. Its possible the mutual fund prices have slid a bit, so I will discount them to 80% of the balance sheet value. A discount value of 60% to inventory is applied since it is largely comprised of finished goods and work in progress. Under a liquidation scenario this inventory might get marked down significantly in order to sell.
Capital assets are much more difficult to value without intimate knowledge of the company and the industry. To deal with this, one can use conservative valuations for the assets to protect against placing too high a value on them. Besides the land and buildings, most of the assets are believed to be specialized for the manufacturing furniture business. It is doubtful that an abundance of new entrants are coming into the Canadian furniture industry and existing entrants may already have manufacturing overcapacity due to shrinking sales. For these reasons, I wouldn't expect to recoup much of the equipment and machinery costs. To be conservative I severely marked these assets down.
Operating leases can be thought of as debt since they are payments bound by a contract. Since Amisco is leasing commercial rental property, a lot of these costs could likely be transferable to another interested party. For this reason, I only considered 25% of the present value lease payment as applicable to Amisco as a liability.
The results of the liquidation value are tabulated below.
Since the current stock price is $1.64 per share and the calculated liquidation value is $3.30 per share, the market is offering the stock at a 50% discount to its current liquidation value!
Even though we calculated a liquidation value for the stock, the company does not seem to be in immediate danger of insolvency. The company has no balance sheet debt and has a current ratio of 3.7 to 1. The company is still earning a small profit and are continuing to execute on the strategy of exploiting weaknesses of cheaper foreign manufacturers by improving on quick delivery times and offering customized furniture options.
To quote the superb value investor Francis Chou, "Good things can happen when you buy stocks at bargain prices". I'll leave it to the reader to decide if Amisco is priced as a bargain.
Disclosure: The author has no shares in this stock