Most stocks are neither obviously halal nor obviously haram. The honest answer comes from a short checklist applied to a company's own numbers. Here is the one Sanad uses, based on AAOIFI Shariah Standard 21. It takes about five minutes once you know where to look.
Step 1: What does the company actually do?
Start with the business, not the numbers. A company whose core activity is conventional banking or insurance, alcohol, tobacco, gambling, adult entertainment or similar is excluded, and no ratio can rescue it. Islamic banks are treated differently, because their business is permissible by design. Check the company's own description and its segment reporting, not just its name.
Step 2: Is debt under 30% of market value?
Take the company's interest-bearing debt and divide it by its market capitalisation (share price times shares outstanding). If a company has $2 billion of debt and a $20 billion market value, the ratio is 10%, which passes. The limit is 30%. Between 27% and 30% the company is on watch, because a small move in the share price or in debt can flip the result. Our guide to the 30% threshold explains why market value is used rather than total assets.
Step 3: Is interest income under 5% of revenue?
Find the interest the company earns on cash and deposits, and divide it by total revenue. Most operating companies earn a little interest, so a ratio like 0.8% is normal. It must stay below 5%. A ratio of 4% to 5% is close to the limit and marks the company as questionable.
Step 4: Work out what to purify
Even a company that passes may have a small amount of impure income. When you receive a dividend, donate the same percentage of it as the company's non-permissible income ratio. For a company at 0.8%, that is 0.8 cents of every dollar of dividends. See what purification is and how it is calculated.
Step 5: Check again every quarter
A result is a snapshot. Debt, share prices and revenue move, so a company that passed last quarter can fail this one. Re-check when new financials are filed, and before you add to a position.
The shortcut
Sanad does these steps for 280 companies on Tadawul, the Qatar Exchange, ADX, DFM, NASDAQ and NYSE and shows the working. The halal stock list has a page for each one, for example Is Apple halal?, and the screener lets you filter by verdict, sector and size.
One caution: this is an automated screen, not a fatwa. Scholars differ on some thresholds, so if you need a personal ruling, ask a qualified scholar.