saaf
Contents

Our methodology, in full

Every verdict on this site is computed by an open, rule-based engine from SEC filings — and every input is linked back to its source. This page is the complete rulebook. (AAOIFI Shari'ah Standard No. 21.)

Step 1 — Business activity screen

A company is excluded outright if its core business falls in a prohibited category, regardless of how clean its financials are. This is checked first, and a hard block short-circuits everything else — a non-compliant verdict from this step never reaches the financial-ratio math below.

The blocked categories, per AAOIFI SS-21's list of non-permissible income sources:

  • Alcohol — brewers, distillers, wineries
  • Tobacco — cigarettes, vaping
  • Gambling — casinos, betting, lottery, gaming
  • Conventional finance — interest-based banks, insurers, mortgage and consumer lenders
  • Pork — pork and swine products
  • Adult entertainment — pornography
  • Weapons — offensive weapons and defense manufacturing

For companies with live SEC filings, this starts from the SIC (Standard Industrial Classification) code on file; the sector and industry labels derived from it are then matched with word-boundary rules so a substring match can't misfire — "bank" matches Bank of America but not, say, a company with "bankable" in its description. "Financial services" on its own is not a blanket exclusion, since Islamic banks and takaful (Islamic insurance) can be permissible; we key on the narrower terms instead. Known defense primes are hard-excluded by name, because their SIC codes (aircraft, engines, shipbuilding, navigation) are shared with civilian manufacturers and can't be told apart by code alone.

Step 2 — Financial ratio screens

Only evaluated once a company clears Step 1. All three ratios must hold:

  • Interest-bearing debt must be under 33% of market capitalization.
  • Cash + interest-bearing securities must be under 33% of market capitalization.
  • Interest income must be under 5% of revenue.

Market capitalization uses a 24-month trailing average (DJIM style) so a price spike can't flip a verdict.

These thresholds match the Dow Jones Islamic Market and S&P index families (MSCI and FTSE each publish their own exact percentage over total assets instead — not identical to each other or to our 33%) rather than the stricter assets-based "30/30/5" variant some providers use. All are legitimate readings of AAOIFI SS-21 — see Which "AAOIFI" below for the exact figures.

The four verdicts

Compliant

Passes the business-activity screen, passes all three financial ratios, and carries no gray-area or reviewer flag. This is the only status where compliant is true.

Questionable

Passes our quantitative screens but is flagged for a reason our numbers can't see. AAOIFI's 5% rule is meant to cover all non-permissible income — including revenue from selling haram goods like alcohol or pork, or from advertising platforms that carry impermissible content — not just interest income. That segment-level revenue isn't disclosed in any free data source we use, so we can't compute it directly. Instead, a quant-clean company is downgraded to questionable if either a scholar-backed curated source flags its business as gray-area, or it sits in an industry with inherent, un-quantifiable impure-revenue exposure — grocery and discount retail (which typically sells alcohol, pork, or tobacco), restaurants, hotels and leisure, media and advertising, or dual-use aerospace. This is a conservative flag for your own review, not a computed verdict.

Non-compliant

Fails the business-activity screen, fails one or more of the financial ratios, or our own hand-curated editorial review rules it out outright (for example, flagging a name our quantitative ratios would otherwise pass). A hard block from Step 1 always wins — even a gray-area industry judgment never overrides it.

Needs review

A safety fallback for when we can't safely conclude either way. It fires when interest income isn't disclosed and cash is at least 20% of market capitalization — a company that large a cash pile could plausibly be earning meaningful interest we simply can't see, so we refuse to guess compliant. It also covers whitelisted funds (see Data sources) whose certification has lapsed pending re-verification. Needs-review names score 0, the same as non-compliant, so nothing built on top of this engine treats them as safe by default.

Data sources

Financials and share data come from the SEC's EDGAR companyfacts API — the same structured XBRL data companies file in their 10-Ks and 10-Qs — with price history from Yahoo Finance used to build the trailing-average market cap described above. Both are free, public, and require no API key. Fundamentals are cached roughly 30 days and price data roughly 1 day, so routine re-screens stay fast without re-fetching a filing that hasn't changed. Most figures shown on a stock page link directly to the SEC filing (form type and filing date included) they were read from; figures we derive ourselves (like a computed ratio) are labeled as such instead of linking out.

A small number of externally certified funds — currently a sukuk ETF and a physical gold trust — are whitelisted as compliant on the authority of their named external Shari'ah certifier, since funds don't file the operating-company financials our screen needs. This is whitelist-only: no fund is heuristically screened, and an uncertified fund is simply unscreenable rather than assumed compliant. Certifications are re-verified annually; a lapsed one moves the fund to needs review until it's renewed.

Where a page shows a boycott or ethical-sourcing flag (BDS-style), that overlay is entirely separate from the compliance verdict above — it never changes a company's status or score, and is surfaced only as additional context.

Which "AAOIFI"

"AAOIFI screening" is implemented differently by different providers, and the choice of denominator changes real verdicts. We use market capitalization as the denominator for the debt and liquidity ratios, matching Dow Jones Islamic Market and S&P. Other providers use total assets instead — MSCI and FTSE each publish their own exact percentage over total assets (not identical to each other or to our 33%), and at least one screener we cross-check against reads AAOIFI itself at a stricter 30% over total assets. Under an assets-based reading, a handful of large, low-debt-relative-to-market-cap companies we mark compliant would not clear the bar. Neither convention is more "correct"; they are different operationalizations of the same standard, and we've chosen the one used by the mainstream Islamic index families. The exact figures for every standard we support are below.

The six standards, side by side

Every standard below is computed from the exact same primary SEC filing data — only the financial-ratio thresholds, denominator, and which ratios apply differ. The business-activity screen (Step 1), the gray-area tier, the certified-fund whitelist, the boycott overlay, and variable-interest-entity handling are identical across all six — nothing here changes those. Where a standard's real published methodology includes a check our free data sources can't compute, we omit that criterion entirely rather than approximate it with a number the standard never published.

AAOIFI — Shari'ah Standard No. 21 (default)

Our default standard, and the one used everywhere else on this site unless you switch it. Denominator: market capitalization (24-month trailing average).

  • Interest-bearing debt under 33% of market cap
  • Cash + interest-bearing securities under 33% of market cap
  • Interest income under 5% of revenue
  • No receivables check — not part of this standard's published methodology, so omitted rather than computed

Source: AAOIFI, Shari'ah Standards, SS-21 (Financial Paper — Shares and Bonds).

Dow Jones Islamic Market (DJIM)

Denominator: market capitalization (24-month trailing average) — the same convention as our default AAOIFI reading.

  • Interest-bearing debt under 33% of trailing average market cap
  • Cash + interest-bearing securities under 33% of trailing average market cap
  • Accounts receivable under 33% of trailing average market cap
  • No interest-income check — DJIM's financial-ratio screen doesn't include one (its 5% impure-revenue tolerance sits in the business-activity screen instead), so omitted rather than invented

Source: S&P Dow Jones Indices' DJIM methodology document blocked direct fetch, so these figures are corroborated rather than quoted verbatim — via a World Bank Global Islamic Finance Development Center presentation citing a 2015 ISRA comparison table, and independently via halalterminal.com's standards comparison. Treat this one standard with slightly less certainty than the others below, which are quoted directly from primary methodology PDFs.

S&P Shariah

Denominator: market capitalization. S&P's own methodology averages this over a trailing 36 months; we reuse our existing 24-month window here rather than build a second price-history calculation — a documented gap that can matter for names near the boundary.

  • Interest-bearing debt under 33% of market cap
  • Cash + interest-bearing securities under 33% of market cap
  • Accounts receivable under 49% of market cap
  • No interest-income check computed — S&P does publish one (non-permissible income other than interest income, over revenue, under 5%), but its numerator explicitly excludes interest income and instead needs non-compliant-activity segment revenue we can't see in free filings. Substituting our interest-income figure here would risk wrongly rejecting a company with material interest income but no non-compliant revenue, so it stays omitted rather than approximated.

Source: S&P Shariah Indices Methodology (S&P Dow Jones Indices, February 2014), Accounting-Based Screens section, quoted directly.

MSCI Islamic Index Series

Denominator: total assets (the Total-Assets index variant MSCI publishes; its separate market-cap-denominated "M-Series" is not modeled here).

  • Total debt under 33.33% of total assets
  • Cash + interest-bearing securities under 33.33% of total assets
  • Receivables + cash under 33.33% of total assets — we don't have a standalone cash-only figure, so we use receivables + (cash and interest-bearing securities combined), a conservative superset of MSCI's published receivables-plus-cash numerator
  • No interest-income check — not part of this standard's published methodology, so omitted

Source: MSCI Islamic Index Series Methodology (January 2023), Financial Screening section, quoted directly.

FTSE Shariah

Denominator: total assets.

  • Debt under 33.333% of total assets
  • Cash and interest-bearing items under 33.333% of total assets
  • Receivables + cash under 50% of total assets — same receivables-plus-combined-cash convention as MSCI above
  • Interest income under 5% of revenue — FTSE's published check actually combines interest income and non-compliant-activities income; we can only compute the interest-income part, since non-compliant segment revenue isn't disclosed in free filings. Because the real numerator is always at least as large as what we compute, checking interest income alone can only make this stricter than FTSE's real test, never more lenient.

Source: FTSE Shariah Global Equity Index Series — Methodology Update (1 June 2012), rule 4.2.2, quoted directly. (This profile's thresholds were corrected to these exact figures from an earlier rounded draft after a 2026-07-18 review caught the discrepancy against this primary source.)

Strict-30 (stricter assets-based AAOIFI variant)

Not a named external index — this is a stricter assets-based AAOIFI variant we model to match how at least one screener we cross-check against reads the standard. Denominator: total assets.

  • Interest-bearing debt under 30% of total assets
  • Cash + interest-bearing securities under 30% of total assets
  • Interest income under 5% of revenue
  • No receivables check in this variant — omitted

Source: per AAOIFI's published methodology, read at the stricter "margin of safety" 30% threshold discussed above and applied against total assets rather than market cap; there is no single named external index-provider document for this specific variant.

Limitations — read this

This is an automated screen, not a fatwa. It applies AAOIFI SS-21 as operationalized by major index providers, using publicly available data — it is not a substitute for a qualified scholar's individual ruling, and we encourage you to consult one, especially for larger positions.

The gray-area (questionable) tier is a curated and rule-based overlay, not a computed measurement. It catches known cases — retailers that sell haram products, advertising platforms, dual-use industries — but it can miss names it wasn't built to recognize, and it can flag a company whose actual non-permissible revenue turns out to be immaterial.

For foreign companies that trade in the U.S. as ADRs and file in a non-U.S. currency, the ratio between ordinary shares and ADR shares isn't always available from free data, which can overstate market capitalization. Because that only ever understates the debt and liquidity ratios — the false-pass direction — such names are capped at needs review rather than asserted compliant.

Any purification estimate shown on this site (the share of income considered impermissible for a shareholder to keep) is calculated from disclosed interest income only, divided by total revenue. It does not — and cannot, from free data — capture other categories of non-permissible income such as revenue from haram products or services. Treat it as a floor, not a complete figure, and consult a scholar for a purification ruling you intend to rely on.