ShariahSignal user guide

Shariah Signal screens listed companies against widely used Shariah compliance criteria and shows the reasoning behind each verdict. It is a research aid, not a fatwa: the app shows you the ratios, the thresholds and the source standard so you can make your own informed decision, in consultation with a scholar you trust where needed.

1. Pick a screening standard

Different bodies use different thresholds, and a company can pass under one and fail under another. Choose the standard you follow in Settings → Standard. The app tells you which one produced any verdict you are looking at, and you can re-run the same company under a different standard to see how sensitive the result is.

2. Search for a company

Search by name or ticker. The result page shows:

• The business activity screen — what proportion of revenue comes from non-compliant activities.
• The financial ratios — interest-bearing debt, cash and interest-bearing securities, and receivables, each expressed against the divisor your chosen standard uses.
• The verdict, with the specific figure that drove it.

3. Read the reasoning, not just the badge

A pass at 29% debt and a pass at 4% debt are very different positions. The ratio view exists so you can see how close a holding is to a threshold and how it has moved across recent reporting periods.

4. Build a watchlist

Add the companies you hold or are considering. When a new filing changes a ratio enough to alter a verdict, the app flags it. Compliance is not permanent — it moves with the balance sheet.

5. Track purification

For companies that pass the screens but earn some incidental non-compliant income, the app estimates the proportion of dividend income that may need purifying, based on the reported figures. Treat this as an indicative estimate for your own calculation.

Data and timing

Ratios are computed from published financial statements, so figures reflect the most recent filing available, not live market data. The reporting date is shown on every screen. Shariah Signal is in beta; verify anything material against the company's own filings.

This page explains exactly how a verdict is produced, so you can judge whether the method matches what you follow.

Two stages

Screening happens in two stages. A company must pass both.

Stage 1 — business activity

Companies whose core business is impermissible are excluded regardless of their balance sheet. That typically covers conventional banking and insurance, alcohol, tobacco, pork, gambling, adult entertainment, and conventional interest-based lending.

For companies with mixed revenue, the test is proportional: income from non-compliant activities must stay below a small percentage of total revenue — commonly 5%. The app shows the revenue split it used and the filing it came from.

Stage 2 — financial ratios

Three ratios are then evaluated:

• Debt — interest-bearing debt relative to the divisor (market capitalisation averaged over a period, or total assets, depending on the standard).
• Liquidity — cash plus interest-bearing securities against the same divisor.
• Receivables — accounts receivable against the same divisor.

Thresholds are commonly set at 30% or 33%, and the divisor differs between standards. Both matter: the same company can pass under a total-assets divisor and fail under a market-cap divisor in a year when its share price fell.

Why standards disagree

AAOIFI, index providers and individual scholarly boards make different choices about the divisor, the averaging window and how to treat certain instruments. None of this is a rounding error — it changes outcomes. The app therefore always names the standard behind a verdict rather than presenting one universal answer.

Purification

Companies that pass the screens may still earn some interest or other non-compliant income. Purification is the practice of donating the corresponding share of your dividend income. The app estimates it as the non-compliant income proportion applied to the dividends you received, using the company's reported figures. It is an indicative estimate for your own calculation, not a ruling.

Data sources and limits

Figures come from published financial statements and update when a new filing is available. Between filings, a verdict can be stale relative to reality — that is inherent to filing-based screening, not specific to this app. Small caps and newly listed companies may have incomplete data, which the app marks explicitly rather than guessing.

What this app is not

It is not a fatwa, not investment advice, and not a substitute for your own scholar. It is a transparent calculator that shows its inputs.