How screening works
Halal Terminal is designed to make compliance explainable. We show key ratios and the reasoning behind the status signal. This is not a fatwa or religious certification.
Screening pipeline (end-to-end)
At a high level, we screen a symbol by combining business activity checks with financial ratio checks. The exact thresholds and denominators can vary by methodology.
- Identify the asset: map symbol/ISIN to a known security and fetch metadata (name, sector/industry, exchange, currency).
- Business activity screen: exclude clearly prohibited primary businesses and flag ambiguous sector mappings for caution.
- Fetch financials: balance sheet and income statement inputs required for ratios.
- Compute ratios: debt, cash/liquidity, interest income, non-permissible revenue, and any additional factors defined by the methodology.
- Apply thresholds: determine pass/fail per ratio and compile a reasoned result.
- Return an explainable output: status + reasons + raw values where possible.
For background reading (with narrative examples), see Shariah Screening Methodologies.
Business activity screening
We evaluate whether a company’s primary activities fall into commonly prohibited categories (e.g., interest-based finance, gambling, alcohol, certain entertainment, etc.). Edge cases exist and interpretation can vary.
Financial ratio screening (definitions)
Many methodologies apply ratio thresholds (e.g., debt, interest income, non-permissible revenue, liquidity). Different standards use different definitions and denominators (assets vs market cap), which is why tools can disagree.
Our goal is to be transparent about the inputs and calculations—so you can understand the “why”, not just the label.
Denominators & why tools disagree
Two apps can look at the same company and disagree while both “follow standards.” The most common reasons:
- Assets vs market cap denominators: market cap is volatile; assets are slower-moving. Using market cap can swing a ratio during price moves.
- Different definitions of “debt”: total debt vs interest-bearing debt only.
- Different revenue line items: reported revenue vs trailing twelve months; classification varies.
- Data freshness: filings update quarterly; market cap updates continuously.
Statuses & what they mean
Update cadence & freshness
Financial statement inputs typically update on earnings/filings cadence (quarterly). Market-derived inputs can change daily. If you’re using market-cap denominators, compliance can drift when price moves materially.
- Re-check after earnings, major price moves, and corporate actions.
- Expect the “freshness” of ratios to vary by region and issuer reporting.
- Use the “why” panel (ratios + reasons) to understand what changed.
Worked example (borderline case, fake numbers)
This is a deliberately simplified example to show how a “borderline” decision can happen. Numbers below are fictional and for illustration only.
- Company: “ExampleCo”
- Sector: Tech (passes business screen)
- Total Assets: 10.0B
- Total Debt: 3.2B
- Market Cap (today): 9.5B
- Revenue (TTM): 8.0B
- Interest Income (TTM): 0.08B
- Non-permissible revenue estimate: 0.06B
- Debt / Total Assets = 3.2 / 10.0 = 32%
- Debt / Market Cap = 3.2 / 9.5 ≈ 33.7%
- Interest Income / Revenue = 0.08 / 8.0 = 1.0%
- Non-permissible Revenue / Revenue = 0.06 / 8.0 = 0.75%
- If a methodology uses Debt / Assets with a 33% threshold, the result may pass (32%).
- If a methodology uses Debt / Market Cap, it may fail (33.7%)—especially after a price drop.
- This is why market-driven denominators can cause compliance drift without new filings.
Known limitations (read this)
- Sector/industry classifications can be wrong or too coarse for conglomerates.
- Some inputs may be missing or delayed for smaller or international issuers.
- Accounting standards differ across regions; line items can map differently.
- We are not a Shariah board. Interpretations vary; consult qualified scholars for religious guidance.
Important disclaimers
- Not investment advice: Screening results are informational.
- Not a fatwa: Consult qualified scholars/boards for religious guidance.
- Data limitations: Timeliness and accuracy depend on source data availability.