Methodology
WVB Shari´a Compliance Rating Report follows the AAOIFI´s standards which are widely accepted by Islamic financial institutions.
ELIGIBILITY CRITERIA
Sector-Based Screens
Business activities related to the following are excluded:
- Pork
- Gambling
- Alcohol
- Cloning
- Pornography
- Media and Advertising excluding:
- A-News
- B-Sports
- Non-Islamic Financial Institutions
- Tobacco
- Gold and silver trading on deferred basis
The above industries are not considered Islamic and would not be appropriate for investment for observant Muslims.
FINANCIAL-BASED SCREENS
After excluding companies with non-Shari´a compliant business activities, the remaining companies are scrutinized for Shari´a compliance of three key financial ratios leverage, cash, and income derived from non-Shari´a compliant activities.
Leverage or Debt
Debt / Total Assets < 30 %.
Cash Compliance: (Cash + Accounts Receivables) / Total Assets < 30 %.
Cash+Interest bearing securities / Total Assets < 30%.
Revenue from Non-Shari´a Compliant Activities: (Non-Permissible Income other than Interest Income) / Revenue < 5%.
Purification: This ratio is provided to investors for purification purposes, it is calculated as:
Dividends * (Forbidden Revenue / Total Revenue)
WVB can apply your own Shari´a board`s criteria of compliant equities. To submit your own Shari´a board´s criteria click here.
World Vest Base (WVB), part of Financial Intelligence Services Ltd., is a relational database of financial, statistical, and market information on active and inactive global companies. The service began in 1984. The database provides a broad range of informational products directed at institutional investors, universities, bankers, analysts, tax and audit practitioners, government agencies and asset managers in corporate, M&A, private capital, equity and fixed income markets. The database currently covers a universe of over 44,600 active listed companies and 30,000 inactive companies. This covers approximately 99% of all listed companies and a total worldwide market capitalization of close to 100%. Company history is available back to 1984 and quarterly data is available depending on when the company was added to the database.
WVB data is based on the country of incorporation. It describes a company as a legal entity, not to be confused with individual issues and listings, and offers complete documents with indexed financial transparency to the data.
WVB has a Shari´a management team consisting of graduates from Al-Azhar University who specialized in Shari´a and Islamic jurisprudence. To see their Bio´s click here.