IOCL as compared to its competitor i.e. HPCL has better liquidity position except for the year 2008-09 where HPCL has better position. The ideal current ratio of 1.5 has not been achieved by any company, primarily due to the nature of the oil and gas sector. The current ratio also represents the margin of safety for creditors. It is necessary to provide a margin of safety to deal with the inevitable inequality in the flow of funds between current asset and current liability accounts. The flow must be absolutely smooth and uniform every year so that the current assets are large enough in relation to the current liabilities so that the company is able to pay its current maturing debt when it comes due. The current ratio trend is depicted in the chart above for better understanding. In this chart, a fluctuating trend can be noticed in the case of IOCL. However, IOCL has a better ratio compared to its competitor apart from the year ending March 2009. Thus, IOCL has a better short term solvency position than HPCL even though it has not achieved the ideal ratio, i.e. 1. However, considering that the company depends on government grants and subsidies, IOCL is in a safe zone and therefore enjoys good creditworthiness and goodwill. The table above shows the quick ratio. From the table, the quick ratio has increased over the last few years, hence the liquidity position of the company is better for the current year as compared to its own past position and the position of HPCL. It is clear that HPCL has a higher proportion of debt to equity and is highly leveraged while IOCL is the least leveraged. This means that IOCL follows a conservative approach compared to its competitors whereas HPCL follows a relatively aggressive approach by taking up more space on paper...... Since the amount not distributed as dividend is retained as profit which is 1- dividend payout ratio, so almost 60% of the profits are retained by the companies and used for research, exploration and development purposes, because there is always a need to plan and develop new new products to meet new and changing demands. The earnings per share of both companies follow a zigzag trend due to the development of net income in the respective years. During the years 2010 and 2011, IOCL's earnings per share decreased compared to HPCL due to increase in number of shares from 119.47 to 242.7. The share capital of IOCL is quite large as compared to HPCL i.e. the share capital of IOCL is 2427.95 (crore) and that of HPCL is 339.1 (crore) but the profit made by the company does not contrast much with each other, so IOCL's EPS is in the same range as HPCL.