The Short Answer
Arrow Electronics stock (ARW) has a qualitatively halal business, but the overall stock verdict is doubtful. The April 4, 2026 filing puts receivables plus cash at 73.00% of assets, above the examined FTSE and MSCI limits. The result depends on the methodology and reporting period.
Current quantitative Sharia screen
Based on 10-Q figures for the period ended 2026-04-04; calculated 2026-07-15.
2,465.766 / 35,953.97
286.512 / 35,953.97
26,247.705 / 35,953.97
21 / 9,473.548
- Financial
- Fails
- Overall
- Fails
Debt/assets is 6.86%, liquidity/assets is 0.80% and receivables-plus-cash/assets is 73.00%, above the examined 50% receivables limit. Disclosed interest and dividend income is 0.22% of sales.
- Financial
- Fails
- Overall
- Fails
Receivables-plus-cash/assets is 73.00%, above the examined MSCI total-assets limit; this is not an index-membership claim.
- Financial
- Pass
- Overall
- Incomplete
Known debt, liquidity and disclosed income ratios pass the examined financial limits, but activity remains incomplete; this is not an official classification.
- Financial
- Not calculated
- Overall
- Fails
A licensed historical market-cap series is not stored; the asset-based receivables screens already fail.
Business-activity disclosure
Arrow distributes electronic components, enterprise-computing products and related supply-chain services. The general distribution activity is generally permissible, while customer and end-use revenue is not reduced to a universal prohibited-revenue numerator.
Limitation: The filing does not classify every customer end use or financing-related stream by a universal Sharia category; activity remains qualitative.
Purification
Arrow discloses $21.0 million of interest and dividend income for the quarter, but ZakatInvest does not prescribe a scholar-approved purification percentage.
Inputs, assumptions and primary sources
- Amounts are USD millions from Arrow's April 4, 2026 Form 10-Q.
- Debt includes $113.371 million of short-term borrowings and $2,352.395 million of long-term debt; operating lease liabilities are excluded.
- Cash and cash equivalents are $286.512 million; no separate debt-security balance is reported in the balance sheet.
- Net accounts receivable is $25,961.193 million and first-quarter sales are $9,473.548 million.
- The filing reports $21.0 million of interest and dividend income for the quarter within interest and other financing expense, net; no fixed purification percentage is prescribed.
- Electronics and enterprise-technology distribution is generally permissible, while customer end uses and receivables financing require qualitative review.
This is a reproducible financial screen, not a fatwa. A failed total-assets screen can coexist with a pass under a market-cap methodology. ZakatInvest keeps the qualitative assessment separate so numerical thresholds do not erase material context.
Distributing electronic components and computing products is generally permissible. Arrow earns distribution margins and service fees, but the filing shows very large receivables and debt; it also reports interest and dividend income within net financing expense. No universal prohibited-revenue numerator is disclosed.
Sharia Screening Methodology
Islamic scholars use several criteria to screen stocks:
- Business activity screen: Is the company's primary business halal?
- Debt ratio: Total debt / market cap must be under 33%
- Interest income: Interest income / total revenue must be under 5%
- Haram revenue: Revenue from haram sources must be under 5%
- Receivables ratio: Total receivables / total assets must be under 49–70% (varies by board)
Arrow Electronics's Business Activity
Arrow connects component makers with manufacturers and resellers. Its business includes:
- Components distribution: Semiconductors and electronic components
- Enterprise computing: IT hardware, software, and cloud solutions
- Supply-chain & design services: Value-added support for customers
Distribution is permissible at the activity level — the concern is the financial structure, not the business itself.
Concerns to Be Aware Of
1. High Receivables Ratio
As a distributor, Arrow carries very large accounts receivable relative to assets. This is the most likely screen to fail and is the primary reason the stock is treated as doubtful. Verify the receivables-to-assets ratio against your board's threshold.
2. Interest-Bearing Debt
Arrow uses interest-bearing debt and accounts-receivable financing programs to fund its working-capital-intensive business. Verify the debt-to-market-cap ratio carefully against the 33% threshold.
3. Borderline, Period-Dependent Screens
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. Interest income from financing customers should also be confirmed against the 5% threshold.
Filing-Based Ratios (April 4, 2026)
Based on Arrow Electronics's Form 10-Q:
- Debt / Assets: 6.86%
- Cash + interest-bearing securities / Assets: 0.80%
- Receivables + cash / Assets: 73.00%
- Interest and dividend income / Sales: 0.22%
Methodology Interpretation
FTSE and MSCI fail on the receivables-plus-cash ratio; the examined Malaysia financial ratios pass, but activity remains incomplete. This is not an index-membership or universal certification claim.
Bottom Line
Arrow Electronics (ARW) has a generally permissible distribution business, but the current overall result fails the examined receivables screens because receivables plus cash are 73.00% of assets. Investors should apply their chosen methodology, review factoring and customer end uses, and use their own purification policy.
For Muslim investors seeking technology exposure with cleaner balance sheets, consider halal-screened names like CDW (CDW) or semiconductor makers such as NVIDIA (NVDA).
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