IOCL 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 was not achieved by any of the companies mainly due to the nature of the O&G industry. The current ratio also represents the margin of safety for creditors. A margin of safety is needed for inevitable inequalities in the flow of funds across current assets and current liabilities. The flow should be absolutely smooth and uniform every year so that the current assets are large enough relative to the current liability so that the business is able to pay the current debt falling due when it becomes due. The current ratio trend is depicted in the graph above for better understanding. In this graph you can see a fluctuating trend in case of IOCL. However, IOCL has a better ratio than its competitor, apart from the year ended March 2009. Therefore, 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 located in a safe zone and therefore enjoys good creditworthiness and goodwill. The table above shows the quick ratio. From the table the quick ratio is increasing in recent years, so the company's liquidity position is better in the current year compared to its past position and HPCL's position. Clearly HPCL has a higher ratio of debt to equity and is highly leveraged while IOCL is less leveraged. This means that IOCL follows a conservative approach compared to its competitors while HPCL follows a relatively aggressive approach by taking more r...... half of the paper...... Since the amount not distributed as dividend is kept as profit which it is 1- dividend payout ratio, so almost 60% of the profits are retained by the companies which are used for research, exploration and development purposes as there is always a need to plan and develop new products to meet the new and changing demands. Earnings per share for both companies follow a zigzag pattern due to the change in net profit for the respective years. In 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 high compared to that of HPCL i.e. the share capital of IOCL is 2427.95 (crore) and that of HPCL is 339.1 (crore) but the profit earned by the company is not much contrasting with each other, so the EPS of IOCL is in the same range as HPCL.