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Requirement Of Reading Financial Statements Of Companies You Trade
I read few articles which recommend reviewing the financial statements of the companies one wants to buy the stocks of. The reason they mention is that, Islamically speaking, its not ok to buy the stocks of a company if the ratio of its debt is very high in relation to the total assets of the firm because it will be risky to invest in that firm.
Taking too much risk is discouraged in Islam ? What if we don’t have access to financial statements of a particular company?
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3 Replies
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Requirement Of Reading Financial Statements Of Companies You Trade
updated 1 year, 3 months ago
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Depending on one’s market outlook and trading strategy it might be a good idea to read the financial statements of the companies that you trade. Financial statements of all publicly traded companies are available through your brokerage firm as well as third party financial web sites.
It is however not a requirement in Islam to read the financial statements of the companies that you want to trade. Islam does not encourage or discourage taking risk. It is up to each person to decide how much risk they can safely assume.
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Isn’t taking too much risk speculation? If yes, isn’t it same as gambling then?
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Taking an outsized risk is not synonymous with speculating. Even assuming a little bit of risk might be considered speculation in certain situations, while even big risks might be justified in other situations. Each person has to determine what constitutes the proper amount of risk for their individual circumstances.
The cause for the impermissibility of gambling is not speculation. For details, please see:
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