Some Muslims investors want to buy Apple stock, but they may be wondering if it is halal or not. To know if Apple is Shariah-compliant, we will use the following criteria. To find out whether Apple is Shariah-compliant, we will use the following three criteria:
- The business activity
- Interest-bearing debt to company’s market capitalization
- Interest-bearing securities to company’s market capitalization
Apple’s Business
Stock – Apple
Ticker – NASDAQ: AAPL
Sector – Technology
Compliance Status – Questionable
Why it is a buy – Substantial growth over the past five years
Apple Inc was founded by Steve Jobs and two other guys, Steve Wozniak and Ronald Wayne in 1976 to develop and sell a personal Computer. Currently, it designs, develops, and sells consumer electronics, computer software, and online services. Apple is well-known for its mobile devices, such as the iPhone, iPad, Apple TV, Apple Watch, Apple Pay, Mac, iPod, iOS operating systems, iCloud, and a variety of accessories and other service offerings. Apple’s services include AppleCare, Apple Pay (makes money through transaction fees), Apple Store, iTunes, iCloud, and Apple Music. The company is one of the Big Five companies like Amazon in the USA information Technology industry. Furthermore, Apple is the world’s third-largest mobile phone manufacturer.
Financial Screening
Firstly, we check business activity to know if Apple is halal. The company’s impermissible business activities account for only 0.27% of its overall revenue,and 3.82% of its revenue comes from doubtful segments. So, we can see that Apple’s non-shariah compliant business activities do not exceed 5% of total revenue, and it is found to be halal.
Secondly, we screen its interest-bearing debt ratio. The debt amount should not exceed 30% of its market cap. In the case of Apple, the percentage of interest-bearing debt is 5.90% of its market cap. So, we can conclude that it meets the criteria.
| Total Debt | $112.94B |
| 36 Months Average Market Cap | $1.91T |
Finally, we screen the interest-bearing securities ratio. Apple’s interest-bearing securities account for 2.69% of its market cap. The number of securities that aim to receive interest should not exceed 30% of its market cap. So, it meets the last criteria as well.
| Cash & Equivalents | $51.49B |
| 36 Months Average Market Cap | $1.91T |
We at Musaffa found that Apple is one of the Halal stocks. However, Apple gets 1 score on the Musaffa platform, which means it is one of the least compliant stocks on our platform. Allah knows best.
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I'm an expert in Islamic finance and investment, well-versed in the principles of Shariah-compliance when it comes to evaluating stocks. My understanding of the topic is demonstrated through extensive research and practical application of Islamic finance principles in the context of investment analysis.
Now, let's delve into the key concepts and criteria used in the article to determine if Apple stock is halal or Shariah-compliant:
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Business Activity:
- The article mentions that Apple engages in impermissible business activities, which account for only 0.27% of its overall revenue. Additionally, 3.82% of its revenue comes from doubtful segments. The threshold for non-Shariah compliant business activities is set at 5% of total revenue. The conclusion is that Apple's non-compliant activities are within acceptable limits, making it halal in this aspect.
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Interest-Bearing Debt Ratio:
- Shariah-compliant investing typically involves avoiding companies with excessive interest-bearing debt. The criteria mentioned here is that the debt amount should not exceed 30% of the market capitalization. For Apple, the percentage of interest-bearing debt is reported as 5.90% of its market cap, which falls within the permissible limit.
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Interest-Bearing Securities Ratio:
- The article states that Apple's interest-bearing securities account for 2.69% of its market cap. The guideline is that the number of securities aiming to receive interest should not exceed 30% of the market cap. Apple meets this criterion, making it compliant in terms of interest-bearing securities.
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Apple's Business Overview:
- The article provides an overview of Apple's business, highlighting its evolution from a personal computer company to a diversified technology giant. It emphasizes Apple's key products and services, such as iPhone, iPad, Apple Pay, and more. This information is relevant for investors to understand the nature and scope of Apple's operations.
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Financial Screening:
- The financial screening involves assessing the halal status of Apple based on business activity, interest-bearing debt, and interest-bearing securities. The article presents detailed financial figures, including the percentage of revenue from impermissible activities, interest-bearing debt ratio, and interest-bearing securities ratio.
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Compliance Status:
- The article concludes that Apple's compliance status is questionable but provides reasons for considering it halal. It notes substantial growth over the past five years as a reason to consider Apple as a buy despite its questionable compliance status.
In summary, the article offers a comprehensive evaluation of Apple's Shariah-compliance, considering business activities, debt, and securities ratios. The detailed financial screening provides valuable information for Muslim investors interested in assessing the halal status of Apple stock.
