ARW
Arrow Electronics, Inc.
Is ARW Halal?
Global distributor of electronic components and enterprise computing products — a permissible distribution business, but high receivables and debt typically require careful financial-screen verification.
What You Should Know
Arrow Electronics, Inc. is a publicly-traded global distributor and value-added reseller of electronic components and enterprise computing solutions, connecting semiconductor and component manufacturers with original-equipment and contract manufacturers and providing supply-chain, design, and IT services. Distributing electronic components and computing products is a permissible activity at the business level under standard Sharia methodology; Arrow earns distribution margins and service fees rather than interest. However, distribution is a balance-sheet-intensive, lower-margin business: Arrow carries meaningful interest-bearing debt and very large accounts receivable relative to assets, so both the debt-to-market-cap ratio and especially the receivables-to-assets ratio frequently sit near or above some boards' thresholds. Because these financial screens often fail or sit on the borderline, Arrow is best treated as doubtful pending careful, board-specific verification of the ratios at the time of investment.
⚠️ Concerns
- •Receivables-to-assets ratio is the primary concern — as a distributor, Arrow carries very large accounts receivable, which can exceed stricter boards' receivables thresholds and is the most likely screen to fail
- •Debt-to-market-cap ratio should be verified carefully against the 33% Sharia threshold at the time of investment — Arrow uses interest-bearing debt and accounts-receivable financing programs to fund its working-capital-intensive distribution business
- •Interest-bearing debt and securitization/financing arrangements are conventional instruments — investors who object to such structures should weigh this regardless of where the ratio sits
- •Interest income from financing customers should be confirmed against the 5% threshold — because the screens often sit on the borderline, the verdict can shift between compliant and non-compliant depending on the board and the reporting period
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