Final answer:
To calculate the ratio of liabilities to stockholders' equity, divide the total liabilities by the total stockholders' equity. For Lincoln Company, with $1,000 in liabilities and $12,000 in stockholders' equity, the ratio is 0.0833, or Option A.
Step-by-step explanation:
The question asks for the ratio of liabilities to stockholders' equity for Lincoln Company. According to the data provided, liabilities total $1,000 and stockholders' equity totals $12,000. To find this ratio, you divide the total liabilities by the total stockholders' equity.
The calculation would be:Liabilities to Stockholders' Equity Ratio = Total Liabilities ÷ Total Stockholders' Equity
Which gives us:Liabilities to Stockholders' Equity Ratio = $1,000 ÷ $12,000 = 0.0833 (or 8.33%)
Therefore, the correct answer to the question is A. 0.0833.