Methodology
How Akinda screens stocks
Every halal verdict the API returns comes from a documented three-phase screen aligned with AAOIFI principles. This page spells out the exact rules, thresholds, formulas, and field mappings so any consumer of the API — or the customer's Shariah board — can audit the math end to end.
Business activity
Phase 1: Sector & revenue screen
First, we check what the company actually does for a living. If its primary line of business sits in a prohibited sector — alcohol, conventional banking and insurance, gambling, tobacco, pork, adult entertainment, weapons — the stock is disqualified outright. For companies in mixed-business sectors, prohibited-segment revenue must stay below the 5% threshold of total reported revenue.
Rule
(Non-compliant revenue ÷ Total revenue) × 100 < 5%
Field on the API: non_compliant_revenue_perc (on /basic-report and /full-report). Source breakdown available on /full-report as non_compliant_revenue_source once extracted.
Financial ratios
Phase 2: Two financial limits
A company that passes the business-activity screen still needs to clear two quantitative ratios — debt and liquidity / interest-bearing cash position — each measured against the same denominator: the company's average market capitalization over the trailing 12 quarters. Both thresholds are set to 30%, aligned with the strict AAOIFI / DJIM reading.
1. Debt limit (< 30%)
A permissible company cannot be built on excessive interest-bearing loans.
Formula
(Total interest-bearing debt ÷ Average 12-quarter market cap) × 100 < 30%
Variables: short-term debt + long-term debt + capital lease obligations. Operating liabilities (e.g. payables) are excluded when they do not bear interest.
Field on the API: debt_ratio_perc
2. Liquidity / interest-bearing cash position (< 30%)
Cash should support real operations — not let the company effectively run a bank by parking funds in yield-bearing instruments. This single ratio captures both the “cash” and “interest-bearing investments” AAOIFI checks.
Formula
((Cash & equivalents + Short-term investments) ÷ Average 12-quarter market cap) × 100 < 30%
Variables: cash & cash equivalents + short-term investments (interest-bearing cash equivalents, money-market holdings, short-term marketable securities). Receivables can optionally be included as a stricter mode — disabled by default to match AAOIFI Standard 21.
Field on the API: liquidity_ratio_perc
Outcome
Phase 3: Final verdict & purification
After the AI auditor processes SEC filings and the API data through those formulas, each stock receives one of three statuses — surfaced on the API as the halal_status field.
Halal
Passed both business activity and financial ratio screens (permissible).
Haram
Failed the 5% revenue rule or one of the 30% financial limits.
Doubtful
Data incomplete, or a major merger / acquisition temporarily obscures true financials.
A note on purification: if a halal stock has a small amount of non-permissible income (e.g. 2%, which still passes the 5% rule), investors typically purify dividends by donating that portion to charity. Akinda calculates and exposes that purification percentage on /full-report, so consumers can present an exact number to end users.
Shariah Advisor
Dr. Muhammad Nazir Khan
Dr. Khan advises Akinda on Shariah screening methodology and alignment with AAOIFI-oriented principles. His guidance helps keep the rules transparent, consistent, and grounded in recognized Islamic finance practice — including certification perspectives relevant to compliant securities analysis (CSAA).
Try the methodology, live
Open the API playground, fire /full-report/AAPL (or any ticker) with your own key, and read every field named on this page back from the wire response.