Browse F.A.Q. Topics
- How often do you update your data?1
- What are the Non-permissible Business activities and Financial Screens mostly sought after?1
- What causes a stock to change compliance?1
- What Criteria do you use for Shariah?1
- What is a Shariah Compliant Stock?1
- What is Non-Permissible income - NPIN?1
How often do you update your data?
- IdealRatings has a large team of equity analysts, who profoundly analyze corporate annual reports, interims on daily basis and as soon as every financial results release. Our solution is also updated on daily basis with Stock prices and Market data that all together affect the compliance status of a stock.
What are the Non-permissible Business activities and Financial Screens mostly sought after?
Prohibited Business Activities:•Interest revenue from operating or non-operating activities •Adult Entertainment •Alcohol •Cinema •Conventional Banking Activities (Banking, Mortgage, Conventional Financial Services, Conventional Insurance) •Gambling •Defense & Weapons •Hotels •Pork •Tobacco Shall the company have a permissible business activity, such as construction and manufacturing, yet has a small ratio of revenue generated from a non-permissible income, that stock is perceived compliant to invest in, given the non-permissible income does not exceed 5%.
Financial Screening:Stock Financial screening is a lengthy profound analysis, yet it can be summarized as follows: Cash & Interest Bearing investments should not exceed 30% of the Average Market Cap. during the previous 12 Months Interest Bearing Debts not to exceed 30% of the Average Market Cap. during the previous 12 Months Total Sum of the liquid Assets should not exceed 67% of the Average Market Cap. during the previous 12 Months
What causes a stock to change compliance?
- A Stock may change its compliance status by having a shortfall in either the financial ratios and/or a change in the business activity and the non-permissible income.
What Criteria do you use for Shariah?
- Due to the fact that Shariah views are variant, IdealRatings solution was designed to allow every user to import and customize his own/ his institutional Shariah rulebook. IdealRatings solution currently supports Market standard rulebooks such as AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) and many other.
What is a Shariah Compliant Stock?
- With the emergence of Islamic Finance, Islamic Investors realized the immense need for equity research and analysis, by which a stock is determined against the Laws of Shariah (Islam), which constitutes a group of business and financial indicators. Business sector analysis screens stocks against prohibited activities in Islam, such as Alcohol, Tobacco, gambling, weapons and more. Financial Screening includes a very wide range of indicators that screen stocks against high debt and leverage ratios. A stock is perceived compliant when it passes the pre-determined set of Shariah rules (business and financial).
What is Non-Permissible income - NPIN?
- Non-permissible income (NPIN) represents all income that is generated from one of the business activities prohibited by Shariah - Pork, Alcohol, Adult Entertainment..etc are all examples of non-compliant activities from Shariah perspective. There are also other controversial business segments as Defense, stem cells, and advertising where there are opposing Shariah opinions with regards to their permissibility. And that is left for every investor to customize as per the Shariah mandate they accept and adopt.