How Penny screens stocks for halal compliance

Layer 1 — Business activity

Companies whose core business is impermissible are excluded outright: conventional banking and insurance, alcohol, tobacco, gambling and casinos, adult content, defense, and pork production. We match on each company's industry classification.

Layer 2 — Financial ratios

Companies passing the business screen are tested against four AAOIFI-style thresholds:

• Interest-bearing debt ÷ market capitalization < 33%
• Cash + interest-bearing securities ÷ market capitalization < 33%
• Accounts receivable ÷ total assets < 49%
• Interest income ÷ total revenue < 5%

Three verdicts, not two

• Halal — passes both layers, with a 1–5 grade showing how far the company sits from each threshold. A 5 passes with wide margins; a 1 passes but sits near a limit and could flip in a future quarter.
• Review — we won't certify it either way: the industry is a genuine gray area where scholars differ (media, hotels, airlines, advertising), or public data was too thin to measure at least two ratios.
• Not Halal — a blocked industry or a measured ratio above its threshold. The app always shows which rule failed and the number behind it.

Data & freshness

Fundamentals and industry classifications come from Finnhub for US listings and Yahoo Finance for international listings (suffixed tickers such as THYAO.IS or BBCA.JK). Server results refresh within 24 hours; a stock's status can legitimately change with each filing or price move.

Limitations

• Our data source doesn't expose interest income as a separate line; that rule is covered by the business-activity screen and disclosed in every breakdown.
• Receivables/assets is approximated from turnover ratios, which can understate total receivables slightly.
• We screen individual US-listed stocks; ETFs are matched against a curated list of sharia-screened funds.
• Purification amounts are conservative estimates (5% default when the interest share is unknown).
• Penny's methodology has not yet been certified by a sharia board. This is a transparent quantitative screen, not a fatwa — for a binding ruling, consult your scholar.