Inventory financing : is inventory financing equity or debt ?

Fatawa Question

Dear Dr Kahf, Salaam Alaykum Wa Rahmatullah Wa Barakatuh. For the inventory financing, is it an equity investment or more of a debt. In other words, could it be used for the following scenario : Company X has a purchase order from a manufacturer for machine spare parts. They have purchased the goods but the goods are still in the ports and they need working capital. Can we use the inventory financing method to buy the goods from company X at landed cost, then ask for a markup when they deliver the goods or at installments ? How would it work ? Company X is not a manufacturer and is not adding value to the goods before selling. They are simply supplying. Is it possible to do a Mudarabah in this way ? I.e. after the transaction has commenced ? Thank you. Hajara

Fatwa

Click hereto view more

Publication Date

2009-05-29

Main Subjects

Religion
Law
Islamic Studies

Topics

• Islamic jurisprudence
• Sales
• Purchasing
• Stock

No. of Pages

1

Data Type

Fatawa

Language

English

Record ID

BIM-734351

• APA
• MLA
• AMA