“Is Nike halal?” Today, we will find out the answer to this question.
NIKE, Inc. is the world’s largest designer and marketer of authentic footwear and equipment for a variety of sports activities. In addition, Nike is one of the most popular consumer brands globally, with a market cap of around a quarter of a trillion dollars.
Before investing in this growth stock, find out if Nike is Shariah-Compliant. To understand the Shariah-compliant status of Nike, we use the following three criteria:
- The business activity
- Interest-bearing debt to Company’s market capitalization
- Interest-bearing securities to Company’s market capitalization
Nike Business Activities
NIKE, Inc. engages in manufacturing and designing sports footwear and apparel. It sells a wide variety of sports products such as eyewear, bags, gloves, socks, protective equipment, etc., under the NIKE brand name. The Company operates in different areas including Europe, Asia Pacific & Latin America (APLA), North America, Middle East & Africa (EMEA), and Greater China. Initially, the company was founded in 1964 under a different name “Blue Ribbon Sports” and became Nike, Inc. in 1971. The company is headquartered in Beaverton, Oregon, and employs more than 73,300 full-time employees.
Is Nike stock halal?
Let’s find out whether Nike stock is halal or not.
Firstly, we check the business activity of Nike. The Company’s impermissible business activities account for only 0.29% of its overall revenue. Moreover, 99.71 % of total revenue comes from Shariah-compliant business activities. So, we can see that Nike’s non-shariah-compliant business activities do not exceed 5% of the company’s total revenue. Therefore, we can say that Nike stock successfully passes from the first screening criteria.
Secondly, we conduct a financial screening analysis. In this step, we screen the Company’s interest-bearing debt ratio. In fact, the interest-bearing debt should not exceed 30% of the Company’s market capitalization. The percentage of interest-bearing debt is 4.94% of Nike’s market capitalization. So, we can conclude that it meets the second criteria.
| Total Debt | $9.41B |
| 36 Months Average Market Cap | $190.46B |
Finally, we need to screen for interest-bearing securities. Nike’s interest-bearing securities account for 7.07% of its market capitalization. The total amount of securities that earn interest should not exceed 30% of its market capitalization. Therefore, we conclude that it passes the last criteria as well.
| Cash & Equivalents | $13.47B |
| 36 Months Average Market Cap | $190.46B |
Nike successfully passes all the screening criteria. Therefore, Muslim investors can comfortably invest in this stock.
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