Model how profit splits between investor and manager across any ratio. Set your capital, estimated profit rate, and years — then see exactly what each party earns annually, cumulatively, and in a loss scenario.
100% capital
Investor provides
100% expertise
Manager provides
Ibn Majah 2289
Hadith basis
Choose Standard (60/40), Equal (50/50), Investor-Heavy (70/30), or Manager-Heavy (40/60) — or drag the custom split slider.
Enter the investor's capital amount and an estimated annual business profit rate based on your projections.
Choose how many years the partnership runs and whether the investor withdraws any profit annually.
See investor and manager earnings annually and cumulatively. Toggle the year-by-year table or loss scenario for deeper analysis.
Mudarabah (also called Qirad or Muqarada in classical texts) is one of the oldest and most celebrated forms of Islamic commercial partnership. The structure is simple: one party has capital but not time or expertise; the other has skill and management ability but not capital. Together they form a partnership where capital meets labour — and profit is shared according to what they agreed before the business began.
The Prophet (ﷺ) explicitly endorsed Mudarabah, and the early Muslim merchants of Arabia used it extensively in long-distance trade, with merchants in Mecca providing capital to skilled traders who would carry goods to distant markets and return with profit to share. Today, Mudarabah remains the backbone of Islamic banking deposit structures and business financing.
The loss scenario is perhaps the most important — and most misunderstood — aspect of Mudarabah. The rule is clear and unambiguous: in a genuine loss, the Rab al-Mal bears the financial loss proportional to their capital, while the Mudarib loses only their invested time and effort.
Investor
Bears full financial loss
Manager
Loses time & effort only
Investor
May recover loss from manager
Manager
Liable for the loss caused
Investor
Capital returned in full
Manager
Earns nothing (effort unrewarded)
This loss structure is what distinguishes Mudarabah from a conventional loan — where the borrower bears all risk and the lender earns interest regardless of outcomes. In Mudarabah, the investor accepts risk as a condition of earning profit without working — making the return halal.
An Islamic profit-sharing partnership where one party provides capital (Rab al-Mal) and another provides management (Mudarib). Profits shared per agreed ratio; financial losses borne by Rab al-Mal unless caused by Mudarib's negligence.
The capital owner in a Mudarabah. Provides all financial capital, earns a share of profit, and bears financial loss in genuine business failure. Does not participate in day-to-day management.
The working partner in a Mudarabah. Provides expertise, management, and labour. Earns a share of profit but no salary. Contributes no capital and bears no financial loss (unless negligent).
The pre-agreed percentage split of profit between Rab al-Mal and Mudarib. Must be expressed as a ratio (e.g. 60/40) not a fixed sum — a fixed return would constitute riba. Negotiated freely between the parties.
Alternative classical names for Mudarabah used in different regional Islamic jurisprudence traditions. All refer to the same capital-plus-labour profit-sharing partnership structure.
Interest or usury — prohibited in Islam. Conventional loans charge riba by guaranteeing a return to the lender regardless of business outcomes. Mudarabah eliminates riba by tying all returns to real business profit.
Mudarabah is an Islamic partnership contract where one party (the Rab al-Mal, or capital owner) provides all the financial capital, and another party (the Mudarib, or manager) provides expertise, labour, and management. Profits generated by the partnership are shared between both parties according to a pre-agreed ratio — for example, 60% to the investor and 40% to the manager. This ratio is agreed and documented at the start of the contract. Neither party can unilaterally change it afterward. The return to the Mudarib is their share of actual profit — not a salary, not a fixed fee.
In a genuine Mudarabah loss — one not caused by the Mudarib's negligence, misconduct, or breach of contract — the financial loss is borne entirely by the Rab al-Mal (investor). The Mudarib loses their time, effort, and any opportunity cost of having managed the business, but suffers no financial loss. This is the key risk the investor accepts in a Mudarabah: in exchange for earning profit without working, they absorb any financial downside. If the loss was caused by the Mudarib's negligence or misconduct, the Mudarib becomes liable for the loss.
No — they are structurally opposite. A conventional business loan gives the lender a guaranteed, predetermined return (interest) regardless of whether the business succeeds or fails. All business risk falls on the borrower. In Mudarabah, the investor's return is not predetermined — it depends entirely on actual business performance. If the business earns more, the investor earns more. If it earns nothing, neither party earns profit (though the investor gets their capital back if no loss occurred). This genuine risk-sharing is what makes Mudarabah halal and conventional loans riba.
There is no single standard ratio — it must be agreed between the parties based on negotiation. In practice, common ratios include 60/40 (investor 60%, manager 40%), 50/50 (equal split), 70/30, and 40/60 depending on the relative contribution of capital versus management skill. Factors that influence the ratio: the expertise and track record of the manager, the risk level of the business, market conditions, and whether the manager also contributes some capital (making it a hybrid Musharakah-Mudarabah). The ratio must be expressed as a percentage of profit — never as a fixed dollar amount (which would resemble interest).
In a pure Mudarabah, the Mudarib provides no capital — only labour and management. However, it is permissible for the Mudarib to invest their own capital alongside the Rab al-Mal's capital by agreement, creating a hybrid arrangement. In this case, the Mudarib earns both their share of profit as Mudarib and a proportional return on their own capital as a co-investor, with the profit-sharing ratio adjusted accordingly. This hybrid structure is sometimes called Musharakah-Mudarabah.
Mudarabah is the foundational structure behind Islamic savings accounts and investment deposits. When you deposit money in an Islamic bank's investment account, you become the Rab al-Mal and the bank becomes the Mudarib — managing your funds in Sharia-compliant investments and sharing the profit per an agreed ratio. On the financing side, Islamic banks also act as Rab al-Mal for businesses (Mudaribs) needing capital. This dual role makes Mudarabah one of the most widely used structures in Islamic banking globally.
A valid Mudarabah must meet several conditions: (1) The capital must be clearly specified and handed to the Mudarib. (2) The profit-sharing ratio must be agreed in advance and expressed as a percentage — not a fixed amount. (3) The Mudarib must have freedom to manage the business without undue interference from the investor (though major decisions may require consultation). (4) The business activity must itself be halal. (5) The contract must specify how losses are handled. (6) The Rab al-Mal cannot guarantee themselves a return — any arrangement that guarantees profit to the investor regardless of business outcome converts Mudarabah into a disguised interest loan.
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Read the guideThis calculator models simplified Mudarabah profit-sharing for educational purposes. The profit rate is an estimate you set based on your own projections — actual business performance will differ. Multi-year calculations assume a constant profit rate, which is illustrative only. Results are not financial, legal, or religious advice. For a valid Mudarabah contract, consult a qualified Islamic scholar and licensed attorney. Profit-sharing ratios and contract terms must comply with applicable laws in your jurisdiction.