Every stock on Sanad goes through the same two-step test, drawn from AAOIFI Shari'a Standard No. 21 on Financial Papers (Shares and Bonds).
Step 1: Business activity
Before any ratio is calculated, Sanad checks what the company actually does. Companies with material revenue from conventional banking, insurance, alcohol, gambling, or weapons are excluded outright — regardless of how clean their balance sheet looks. There's no ratio that can offset a core business built on interest or gambling.
Step 2: Financial ratios
Companies that pass the business-activity screen still have to clear two thresholds:
- Interest-bearing debt must stay under 30% of market capitalization.
- Non-permissible income (mainly interest earned on cash holdings) must stay under 5% of revenue.
A company that clears both is Halal. One that's close to either threshold, or that passes but still carries a small amount of impure income, is flagged Questionable rather than a clean Halal — see our post on what each verdict actually means for the distinction.
Not generated by Sanad's own judgment
Every ruleset is reviewed and signed off by an independent Shariah advisor before publication. Sanad automates the calculation — it doesn't interpret the standard itself.