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Selection of Islamic stocks for investing involves a process of Shar'ah screening to ensure the compatibility of the stock with the permissible forms of investments

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Selection of Islamic stocks for investing involves a process of Shar'ah screening to ensure the compatibility of the stock with the permissible forms of investments in the Shari'ah. From this perspective, A) Apply the AAOFI ratios for financial screening on XYZ company. Conventional debt / total assets (Cash + interest-bearing deposits) / total assets (Total interest income + income from non-compliant activities) / total revenues Accounts receivable / total assets . B) Based on the above ratios, identify whether the activities of XYZ are compliant with Shari'ah law or not XYZ company information 2020 Total assets Interest-bearing deposits Cash Conventional debt Accounts receivable Inventory Fixed assets Account payable Total interest income income from non-compliant activities Revenues 5,000,000 5000 750,000 894,000 525,000 54000 567000 54000 54000 500000 15,000,000

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