Research note · Methodology · August 16, 2026
The 33% rule is not a verdict.
A screen can tell me that a company sits below a debt or cash threshold. It cannot tell me that I have finished thinking. The useful thing about a clear rule is not that it makes judgment disappear; it makes the remaining judgment visible.
Figure 1 · A screen has three jobs
Classify what is clear, surface what is uncertain, and refuse to invent an answer.
The third box is a feature, not an embarrassment. “Questionable” is more honest than pretending a data gap is a pass.
A ratio is a guardrail, not a personality test
The 33% threshold used in AEA’s educational screener is a deliberately simple ratio: long-term debt and cash relative to market capitalization. It is useful because it forces the same first question across companies. It is incomplete because market capitalization moves daily, balance-sheet tags differ by issuer, and business activities do not fit cleanly into a database field.
| A screen can say | It cannot say |
|---|---|
| Debt or cash exceeds a stated cap | Why the balance sheet looks that way or whether it will change |
| The SEC classification matches a category | Whether that category captures the economic substance |
| Data could not be extracted reliably | That missing data is a green light |
The thing I changed after building the tool
I stopped treating a missing tag as a zero. A company can report debt under Notes Payable, Senior Notes, or a more specialized line item; grabbing the first generic tag can turn a real balance sheet into a fake clean one. The screener now checks a broader set of filing tags, prefers unrestricted cash over a blend of cash and customer collateral, and labels unresolved cases as unresolved.
What the result means
“Pass” means the company cleared this particular educational screen based on the data and classifications available. It does not mean an investment is suitable, ethical in every framework, or free of risk. “Fail” means a disclosed threshold was not met. “Questionable” means the tool is telling the truth about what it does not know.
Use it correctlyOne output, then more work
Read the company’s own filings, understand the source of returns, and consult a qualified scholar for personal religious guidance. AEA’s tool is a transparent research aid, not a certification authority.