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AMAZON.COM Inc :: USA ::
NASDAQ :: 9th July 2020

AMAZON.COM Inc :: USA :: NASDAQ :: 9th July 2020 Source: blog.islamicly.com

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Company Name Amazon INC.
Shariah Compliance NOT COMPLIANT
DP RATIO 7.42%

Business sector screening:

Amazon.com Inc. offers a range of products and services through its Online portals. The Company's products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. It also manufactures and sells electronic devices. The Company derives revenue from 5 business segments. Two of these business segments consisting of non-permissible activities, contribute more than 5% of the revenue of Amazon. These are:

1 - Physical stores - Its Whole foods segment has sales from Alcohol/Pork/Tobacco

2 - Subscription services - Which includes revenue from annual and monthly fees associated with Amazon Prime memberships (giving access to non-permissible general entertainment content) , digital video/music, and other non-AWS subscription services.

We believe the above non permissible revenue is more than 5% of total revenue of Amazon, hence the business sector seems to be non-compliant."

Segment break up

Operating Revenue in Millions of USD

Segment Description Segment Revenue Non-permissible Revenue % non-permissible revenue Non - permissible segment classification Comments
Online stores $ 1,41,247.00
Physical stores $ 17,192.00 $ 859.60 5% Alcohol/Pork/Tobacco Its Whole foods segment has sales from Alcohol/Pork/Tobacco
Third Party Seller services $ 53,762.00
Subscription services $ 19,210.00 $ 19,210.00 100% Adult Entertainment Amazon prime membership containing digital video and digital music
AWS $ 35,026.00
Advertising services and others $ 14,085.00 The advertising services are for their in-store products. So seem to be compliant
TOTAL $ 2,80,522.00 $ 20,069.60 7.15%
Total Revenue $ 2,80,522.00
Non-permissible Operating revenue $ 20,069.60
% of non permissible revenue 7.15%
Sector compliance FAIL

Non-operating Revenue in Millions of USD

Segment Description Segment Revenue Non-permissible Revenue % non-permissible revenue Non - permissible segment classification Comments
Interest Income $ 832.00 $ 832.00 100% Interest Income Non-operating Income
Other income $ 203.00
TOTAL $ 1,035.00 832

Dividend Purification calculation

Revenue Description Non permissible Revenue (millions of USD)
Non-permissible operating revenue $ 20,069.60
Non-permissible non-operating revenue $ 832.00
Total Non-permissible revenue $ 20,901.60
Total Revenue of the Company $ 2,81,557.00
Dividend purification ratio 7.42%

This will not be displayed in Islamicly as the sector of the company is non-compliant i.e. investment in this stock is not permissible hence dividend purification would not be applicable

Since all the Ratio are within the limit, the stock passes the Financial ratios screen

Financial Ratio Screen:

(All figures in millions of USD for Quarter ended 31st March 2020)

Particulars Amount Remarks
3 years Average Market 8,29,218
Total Debt 39,932
Islamic Debts
Adjusted Debts Adjusted Debts
LC1 Ratio 4.82% - Within limits
Cash 49,292
CC2 Ratio 5.94% - Within limits
Accounts Receivables 17,836
CC1 Ratio 2.15% - Within limits

Source:

All the above information is based on the website of the company and financial report for 2020

Conclusion:

Given the above information, we believe Amazon Inc is a Shariah Not compliant company as per the Shariah screening Criteria.

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TAG: SHARIAH COMPLIANCE STOCK RESEARCH

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