Istisna’ is a sale transaction structure of contract where a commodity is transacted before it comes into existence. It is an order to a manufacturer/contractor to manufacture/construct a specific commodity/asset for the purchaser.

Business Valuation 103 – RELATIVE VALUATION MODELS

When businesses have grown to a size that the ‘rule of thumb’ approach is no longer appropriate, then some form of market-based pricing methodology must be used. The principle here is to find some standard variable within companies which appear to be consistently priced by the capital market.  As expected, there are a large numberContinue reading “Business Valuation 103 – RELATIVE VALUATION MODELS”

Business Valuation 105 – Contingent Methods of Valuation

The Black and Scholes option pricing theory (OPT) offers a clue as to how the equity in a firm may be valued. Suppose we recognise the fact, that an equity investor in a geared firm with limited liability has a call option on the underlying assets of the firm. In that case, we have, potentially, a method for valuing the business.   Conceptually thisContinue reading “Business Valuation 105 – Contingent Methods of Valuation”

MURABAHA – Cost plus Financing

Murabaha is currently the most widely used Islamic sharia compliant mode of finance, used by Islamic sharia-compliant financial institutions: it is as simple as buy an asset for the customer; sell the asset at a premium (profit), allow payment of the sale price in instalments to the customer. That is a Murabaha. A Murabaha isContinue reading “MURABAHA – Cost plus Financing”