COST
Is Costco (COST) halal?
Costco (COST) is currently classified COMPLIANT under the AAOIFI Standard 21 halal screen: the strictest of the mainstream halal certification frameworks, with a debt ratio of 1.8% against the 30% AAOIFI threshold. The full breakdown of which AAOIFI criteria the stock passes or fails is below. Educational screen, not a fatwa, always verify with your local scholar.
AAOIFI Standard 21 criteria. The screen tests four conditions, each independently disqualifying: (1) business activity must not be in prohibited sectors (alcohol, gambling, conventional banking, conventional insurance, pork, adult entertainment, weapons of mass destruction), (2) interest-bearing debt as a share of market cap (or total assets) must be below 30%, (3) interest-bearing income as a share of total revenue must be below 5%, and (4) illicit-business revenue as a share of total revenue must be below 5%.
Costco's screen result. Costco operates in the Consumer Defensive sector (Discount Stores industry), with a debt ratio of 1.8%. Refer to the full screen output for the per-criterion pass/fail signal.
Why AAOIFI vs lighter screens. Dow Jones Islamic and S&P Shariah indices allow up to 33% debt-to-market-cap, which lets in many companies that classical Islamic jurisprudence would exclude. AAOIFI Standard 21's stricter 30% debt-to-assets threshold reflects classical scholarship, stocks that pass it are accepted by Saudi, Emirati, and Malaysian Sharia boards. invest-like uses AAOIFI specifically because the looser screens admit borderline cases that defeat the purpose of a halal screen for most observant investors.
Important caveats. This is an automated educational screen against documented AAOIFI criteria, not a religious fatwa. AAOIFI thresholds can change; some scholars apply additional qualitative tests (debt purification, dividend purification) beyond the four quantitative criteria above. Always verify with your local scholar before treating any stock as halal-compliant for your specific purposes.
How invest-like measures this
invest-like applies the AAOIFI Standard 21 screen: the strictest of the mainstream halal screens. It tests three quantitative criteria (debt ratio, interest-bearing income, illicit-business revenue) plus a qualitative business-activity test. A stock is classified HALAL only if it passes all four.
AAOIFI thresholds are stricter than the Dow Jones Islamic and S&P Shariah indices on purpose: they reflect classical Islamic jurisprudence, not lighter Western Sharia indices that allow up to 33% debt-to-equity. Stocks that pass the AAOIFI screen are accepted by most Saudi, UAE, and Malaysian Sharia boards. Always verify with your local scholar; this is an educational screen, not a fatwa.
This is educational analysis based on investing frameworks. It is not investment advice or a recommendation, and it does not know your situation. Do your own research before you decide.
