Can Masterton "afford" the conversion? (look at Exhibit 3). Support answer.

EXHIBIT 3 E 3 Masterton Carpet Mills, Inc. Financial Statements (For the Fiscal Year Ending June 30, 2000) Income Statement Net sales Less cost of goods sold Gross margin Distribution expenses Selling and administrative expenses Other expenses Net income before tax $75,000,000 56,250,000 $18,750,000 $2,250,000 11,250,000 2,250,000 $ 3,000,000 Balance Sheet Current assets Fixed assets Total assets Current liabilities Long-term debt and net worth Total liabilities and net worth $26,937,500 24,000,000 $50,937,500 $10,312,500 40,625,000 $50,937,500 EXHIBIT 3 E 3 Masterton Carpet Mills, Inc. Financial Statements (For the Fiscal Year Ending June 30, 2000) Income Statement Net sales Less cost of goods sold Gross margin Distribution expenses Selling and administrative expenses Other expenses Net income before tax $75,000,000 56,250,000 $18,750,000 $2,250,000 11,250,000 2,250,000 $ 3,000,000 Balance Sheet Current assets Fixed assets Total assets Current liabilities Long-term debt and net worth Total liabilities and net worth $26,937,500 24,000,000 $50,937,500 $10,312,500 40,625,000 $50,937,500