Arabic (خسارة) for loss (it is the opposite of ribh– ربح). In the context of selling (ba’i or bay’– البيع), khasarah represents the difference resulting from selling products and services for less than the cost of production/procurement. In the realm of investing (istithmar– الاستثمار), it constitutes the negative difference between the selling price and the purchase price of commodities or securities. Bearing losses is typically viewed as a probable result of risk taking (mukhatarah), on the basis of the shari’a maxim (qa’edah shar’iyyah):”al-kharaj bi al-dhaman“- الخراج بالضمان. Therefore, entitlement to profit is intimately associated with being prepared to bear losses.

Technically speaking, khasarah may either mean loss or gross loss, as the context dictates.