Halal screening
Two balance-sheet ratios against market capitalisation and a test on the line of business, run across every listed US company over a billion dollars. Screened on AAOIFI’s limits, which are the strictest of the five published sets — a company clearing them clears the other four on these ratios as well.
The five published standards
A mechanical screen, not a scholarly ruling. AAOIFI, S&P, Dow Jones and FTSE measure debt and cash against an average market capitalisation (12, 36, 24 and 24 months); MSCI against total assets, which is why the same company can pass one and fail another. Interest income is tested against revenue where the company reports it; the rest of the revenue test — income from excluded activities — needs a breakdown no statement carries, and is not run here. Verify against the provider before relying on it.
| Standard | Debt limit | Liquid assets limit | Divided by |
|---|---|---|---|
| AAOIFI Shariah Standard 21 | 30% | 30% | 12-month market cap |
| S&P Shariah | 33% | 33% | 36-month market cap |
| Dow Jones Islamic Market | 30% | 30% | 24-month market cap |
| FTSE Shariah (IdealRatings) | 33% | 33% | 24-month market cap |
| MSCI Islamic | 33% | 33% | Total assets |
The divisor is not a detail. MSCI divides by total assets; the other four by an average of market capitalisation over 12, 24 or 36 months — a different test on the same company, and a business trading well above book clears the market-cap version far more easily than the asset one. The screener runs AAOIFI’s pair on today's market cap, the tightest of the market-cap set, so a company passing here clears S&P’s, Dow Jones’s and FTSE’s limits too. It says nothing about MSCI's asset test, and nothing about whether a provider would include the company: each of them runs tests this screen does not. A company's Shariah tab runs all five on their own denominators.
What the screen tests
| Test | How it is run here |
|---|---|
| Interest-bearing debt | Total debt from the balance sheet, divided by market capitalisation as the screener reports it today. |
| Cash and interest-bearing securities | Cash and short-term investments over the same market capitalisation. |
| Line of business | A keyword test on the company’s sector and industry against 14 excluded terms. It reads a classification, never the company’s actual revenue mix. |
What it does not test, and why that matters
Three of the tests the index providers actually run are absent here, and any one of them could exclude a company this screen passes.
| Missing test | Why |
|---|---|
| Non-compliant income | The share of revenue from interest or from an excluded activity has to be read out of the filings line by line. No such figure is published, and a segment breakdown does not separate interest income. |
| Receivables | Accounts receivable over market capitalisation, which AAOIFI caps. The balance-sheet field exists but the cap is applied on a basis this screen does not reproduce, so running it half-right would be worse than saying it is absent. |
| An averaged market capitalisation | Providers use a trailing average — 24 or 36 months depending on the standard — rather than today’s price. A company can pass here and fail there purely on the day you looked. |
This is why nothing on this desk says “compliant”. It says the company clears the two ratios this screen can measure and is not in a line of business the keyword list catches. Verify against the provider before relying on it.