Screening Methodology

A company is excluded outright if its core business involves alcohol, gambling, conventional (interest-based) banking/insurance, pork products, weapons/defense, adult entertainment, tobacco/nicotine, music or movie/film production, advertising, human/animal cloning, non-halal foods, marijuana, or other impermissible activities — regardless of its financial ratios. This screen runs first and overrides everything below it.

This stage is binary. There is no threshold and no tolerance, unlike every ratio below it. A company whose revenue comes from an excluded category fails no matter how clean its balance sheet is, and the ratios only ever apply to one that has already cleared it.

Companies that pass the activity screen are then checked against standard AAOIFI-style thresholds across three ratios, each measured against market cap or revenue as appropriate:

Different accepted standards genuinely disagree on the exact numbers above — e.g. Mufti Taqi Usmani's published criteria use 33% thresholds measured against total assets rather than AAOIFI Standard 21's 30%-of-market-cap, plus two additional tests AAOIFI dropped in a later revision, and Dow Jones Islamic Market/S&P Shariah Indices/MSCI/FTSE Shariah each publish their own real thresholds and denominators (see the full breakdown below). A stock can be compliant under one accepted standard and not another. Our in-house research module checks all seven, plus the revenue-purity check they all require, combined with the activity screen into one verdict per methodology — visible as a research section on this page and on !halal in Discord — it's already found real companies where the verdicts diverge. Every methodology here is backed by a real, published, source-cited standard — we deliberately don't include any methodology whose exact formula we'd only be inferring.

Each row is a real, published standard — not a paraphrase. Every ratio here is numerator / denominator < threshold; lower always means more compliant.

^§ Why AAOIFI has no receivables row, when several other screeners show one. This is a researched conclusion, not an omission. AAOIFI's own Secretary-General (Dr. Hamed Merah, “Shari'ah Screening in the Islamic Capital Markets”, October 2017) sets out the market-cap two-ratio screen with no receivables test, and Standard 59 removed the earlier illiquid-assets test. We also found that one competing screener's own two properties contradict each other on this point — its API documentation states 49% of total assets while its own comparison article states 30% of market cap, “unique to AAOIFI”. Neither matches the higher-credibility primary source, so we adopted no receivables threshold for AAOIFI rather than pick one. Usmani likewise tests no receivables ratio; its net-liquid-assets test does that work instead.

^† Usmani is the only one of the seven whose own published source (Zamzam Capital's stated criteria) explicitly counts lease liabilities — finance and operating leases — as debt. We checked each other's own primary source directly: AAOIFI, MSCI, and FTSE are silent on lease treatment, and DJIM/S&P Shariah's real-world debt figure (per an independent academic reconstruction from filing data) is conventional interest-bearing debt only.

^‡ AAOIFI, DJIM, S&P Shariah, and MSCI count operating lease liabilities as debt too (finance leases are deliberately excluded — see why below), unlike Usmani's own explicit finance-and-operating treatment. Their own published sources don't explicitly require this the way Usmani's does — this is our own judgment call, made from real data rather than a citation: a full sweep of every symbol on the watchlist found that adding finance leases to debt flipped only 8 symbols from compliant to non-compliant across all four standards combined — too small to justify a change on its own — while adding operating leases flipped 77, concentrated in real-estate-heavy retailers, restaurant chains, and logistics companies (Target, Dollar General, Dollar Tree, Darden, Yum! Brands, Lowe's — the kind of company that leases most of its stores rather than owning them). That's a real, economically sensible effect, not noise, so we made it a permanent part of these four calculations rather than treating it as optional per-lookup. It runs behind a simple on/off switch on our end (ENABLE_OPERATING_LEASE_DEBT, on by default) purely so we can turn it off instantly if that judgment ever needs revisiting — not something a visitor to this site can toggle. A concrete example: a company with $250M in conventional debt and a $1B market cap sits at 25% under AAOIFI's 30% line — compliant. Add a real $100M in operating lease liabilities (store leases, say) and it becomes $350M / $1B = 35% — over the line. Same company, same real balance sheet; whether operating leases count as debt is the difference between a pass and a fail. FTSE is not affected by this change — same reasoning gap as AAOIFI/DJIM/S&P Shariah/MSCI, just not in scope for this particular update.

MSCI publishes two series, and we run both: MSCI's own methodology document sets out the standard MSCI Islamic Index and the MSCI Islamic M-Series side by side in a single table. Same business-activity screen, same 33.33% debt and cash thresholds — but the M-Series measures them against the average of month-end market capitalization over the preceding 36 months rather than total assets, and allows a looser 49% on combined receivables+cash. It looks at first like a duplicate of S&P Shariah, since both use a 36-month averaged market cap — it isn't: S&P allows 49% on cash+securities where the M-Series allows only 33.33%, so a company holding cash between those two figures passes S&P and fails the M-Series on identical real numbers. Taken verbatim from MSCI's own published threshold table, not inferred.

FTSE vs. MSCI — the one that looks like a duplicate but isn't: both use the exact same total-assets denominator and the exact same 33.33% debt/cash thresholds, which made us initially treat FTSE as "just MSCI" — but FTSE's own official fatwa document states its combined receivables+cash ratio must stay under 50%, not MSCI's 33.33%. A company sitting at, say, 40% combined receivables+cash fails MSCI but passes FTSE on identical real numbers. Confirmed directly from FTSE Yasaar's own published methodology, not inferred.

What's genuinely similar: every standard tests the same two underlying questions (how much of the company is financed by interest-bearing debt, and how much of its balance sheet earns interest passively), all seven cap non-permissible income at <5% of revenue, and DJIM/S&P Shariah/AAOIFI all use market cap as their base (just current vs. 24- vs. 36-month averaged), while MSCI/FTSE both use total assets. What's genuinely different: the denominator (market cap vs. total assets), the averaging window (none / 24mo / 36mo), whether a third receivables ratio exists at all (Usmani/AAOIFI don't test it), how loose that receivables threshold is (33% to 50%), and — as above — whether lease liabilities count as debt.

Four of the 7 measure debt against market capitalisation; three measure it against total assets. Market cap moves daily. Total assets move once a quarter.

So a company can cross a compliance line without anything about its business changing — and can cross back the same way. A verdict that moved because the share price moved is not the same event as a verdict that moved because the company borrowed, and the two are indistinguishable from a single label.

That is why all 7 are published here rather than averaged into one. Averaging would hide exactly the information a careful reader needs.

Ratios recompute when a new filing lands, and the watchlist is re-screened on a rolling schedule. The date shown on a verdict is the last time that symbol was actually recomputed — not the last time this page was built, and not the date of the newest filing we hold for some other company.

A symbol we have not been able to recompute says so on its own page rather than inheriting the freshness of the ones we have.

Popular consumer halal-screening apps aren't a 6th, 7th, and 8th methodology — checked each one's own stated approach directly, and every one we found maps onto a standard already in the table above:

Musaffa is a real outlier: a 30% threshold (AAOIFI's number) applied to a multi-year averaged market cap (S&P/DJIM's style of denominator) — a hybrid Musaffa has never published an exact methodology document for. Amana Funds' own screen is real and well-known (a real 40-year mutual fund track record), but we could only find its exact numbers via secondary sources — Saturna Capital's own site didn't return usable content to us directly. We deliberately don't add either as a named standard above: presenting an inferred or unconfirmed formula next to six properly primary-sourced ones would overstate how well-founded it is. This gap is exactly why a borderline stock can come back "not halal" on Musaffa while showing compliant on Islamicly, S&P Shariah, FTSE, or our own engine — genuinely different thresholds on a similar-shaped ratio, not a data error on either side.

Each ratio above exists to answer one real question: is riba (interest) a meaningful part of how this company is actually financed and how it actually earns money? Almost no modern public company is 100% free of interest exposure somewhere in its balance sheet — a small cash reserve earning bank interest, a modest credit line — so the thresholds represent a real, scholar-set line between "incidental, tolerable exposure" and "interest is structurally part of the business."

Interest-bearing debt ratio — measures how much of the company is financed through interest-based borrowing rather than equity or interest-free financing. A company that runs mostly on interest-based loans is participating in riba through its own capital structure, even if the product it sells is entirely permissible.

Interest-bearing securities/cash ratio — the mirror image on the asset side: a company holding a large portion of its balance sheet in interest-bearing instruments (bonds, money-market funds, interest-earning deposits) is earning riba passively, regardless of what its core operations do.

Revenue/non-permissible income purity — even a genuinely halal-focused company can pick up a small amount of interest income incidentally (e.g. interest on an operating cash balance). Scholars generally don't disqualify a company outright for this if it stays below a small threshold — instead, the impermissible portion is meant to be "purified" (typically donated, not kept as personal gain). That's exactly what a stock's own Purification Ratio figure represents on this site — a real, calculated share of income you'd purify if holding the stock, not a verdict itself.

Riba — interest. The single most direct concern this whole screen exists to catch, on both the debt side (borrowing) and the asset side (holding interest-bearing instruments).

Gharar — excessive, avoidable uncertainty about what's actually being exchanged in a transaction. More relevant to how you trade (options, uncovered short-selling) than to a company's own verdict — see Is Day Trading Halal? and Is Options Trading Halal?.

Maysir — gambling, or a transaction so disconnected from real value that it resembles a bet. This is why the business-activity screen above excludes gambling/casino operators outright, and it's part of why highly speculative, no-underlying-utility crypto assets get flagged QUESTIONABLE — see Is Crypto Halal?.

Purification — donating the small, incidental impermissible portion of income (usually interest) a compliant company's shareholders receive, rather than treating the whole return as clean. Not something this site calculates or handles for you — the Purification Ratio shown on symbol pages is informational, sourced from the screening provider.

These four are the ones this page leans on. The full Islamic finance glossary defines them at length alongside the rest of the vocabulary a verdict on this site is written in — the AAOIFI standard, the debt ratio and non-permissible income thresholds above, the business activity screen, and the contract types (murabaha, musharakah, sukuk) the standards are built on.

Screened separately via a hand-curated compliance list rather than the same automated provider pipeline — coins don't have the balance-sheet data the ratio screen above depends on. Coverage is intentionally narrower than the stock universe. See Is Crypto Halal? for the real scholarly reasoning behind each coin's status.

COMPLIANT / NON-COMPLIANT / QUESTIONABLE reflect the screening provider's most recent assessment, refreshed at most every 31 days — a symbol can drift between categories between refreshes as its financials change. Sector and country data (see Browse) come from a separate source (Finnhub company profiles) and are informational only — they don't affect the verdict. Full current status for every screened symbol is on the Compliance page. Screening a stock or coin doesn't address how you trade it — that is a separate question, asked one instrument at a time on the blog: stocks, day trading, forex, options, futures. When in doubt, consult a qualified scholar.