Short-term Borrowings in Shariah Screening

Investment Questions and Chats Stocks
#1

Assalam u alaikum,

I want to ask if Short-term Borrowings should be included in Debt when screening companies for Shariah-compliance under the criteria of Interest-bearing Debt to Total Assets being less than 37%?

Many companies have Short-term Borrowings in the form of running finance / cash finance facilities and these often bear mark-up but are usually excluded when screening for Shariah compliance.

I will appreciate the guidance of Honorable Muftis in this regard.

Thanks

#3

Wasalam

May Allah bless you.
Yes you should include short and long terms borrowings.

And Allah knows best!