AAOIFI Stock Screening Ratios
Understand the debt, cash, and income checks used alongside the business-activity screen.
Start with what a company does, then examine its financial exposure. The calculations below explain HalalSignalz's AAOIFI-aware screening methodology. They are an educational example, not a current verdict on a real company or an independent Shariah certification.
Start with the business, then check the ratios
A company with a prohibited core business does not become permissible because its debt is low. Check the business description, segment reporting, and material sources of income before interpreting the numbers. AAOIFI's Shariah Standard 21 addresses shares and bonds; this guide summarizes our implementation and does not replace the standard or a qualified review.
Limits used in our public methodology
Debt ÷ market capitalization: below 30%.
Cash exposure ÷ market capitalization: below 30%.
Non-permissible income ÷ revenue: below 5%.
Check the numerator definitions and source notes. A total-cash or reported-interest-income proxy is not a complete activity review.
A worked example with hypothetical numbers
Imagine a company with $1,000 million in market capitalization and $100 million in revenue. Assume its review identifies $200 million in debt, $100 million in cash exposure, and $2 million in non-permissible income for the same reporting period. These are made-up amounts for learning the arithmetic.
Debt: 20%
$200m debt ÷ $1,000m market cap × 100
Cash: 10%
$100m cash exposure ÷ $1,000m market cap × 100
Non-permissible income: 2%
$2m identified income ÷ $100m revenue × 100
These three hypothetical results fall below our numeric limits. They do not establish a halal verdict: the business review, completeness of the income assessment, accounting definitions, and the chosen screening standard still matter. The 2% result is not a dividend purification instruction.
Use evidence that belongs to the same review
- Read the latest available annual or quarterly filing, including debt notes and revenue segments. SEC EDGAR provides U.S. company filings.
- Record the financial period and the date of market capitalization. Do not combine unmatched periods without explaining the limitation.
- Distinguish interest-bearing exposure from broad accounting totals. Explain any proxy used when finer detail is unavailable.
- Treat missing data as unknown. A zero or rounded-to-zero reported interest-income figure does not prove all business income is permissible.
Read company snapshots without confusing the dates
Our list of 76 screened stocks links to dated company pages, including Apple's screening notes. The screening review date, financial reporting period, market-price observation, and article update date describe different things. Read the company's calculations and source notes before relying on a ratio.
Where we show reported interest income divided by revenue, it is a screening proxy, not a full business-line impermissible revenue audit. This article makes no company-specific purification calculation.
Frequently asked questions
Which financial ratios does HalalSignalz check?
Our public methodology uses debt and cash ratios below 30% of market capitalization and non-permissible income below 5% of revenue, alongside a business-activity screen. Read the methodology for how available financial data is used and where further review is needed.
Does a low interest-income ratio prove all revenue is permissible?
No. Reported interest income divided by revenue is a screening proxy, not a full business-line impermissible revenue audit. Missing or rounded-to-zero data does not establish that a company has no non-permissible income.
Can I use a screening ratio as my dividend purification percentage?
Do not automatically use a screening ratio as a purification rate. Follow a documented calculation for the company or fund, the relevant income period, and your chosen Shariah authority. This guide does not calculate a purification amount.
How often should I review a stock screen?
Recheck after new quarterly or annual filings and material business changes. Market-cap-based ratios can also change with prices. A page update date is not a new screening review; use the screening date and financial period shown on the company page.
Editorial update by HalalSignalz. Educational research, not a fatwa or personalized investment advice. For a company or fund purification decision, use documented guidance from your chosen Shariah authority.