Many different financial ratios and "rules of thumb"
have been promoted for financial institutions worldwide, but few have been
consolidated into an evaluation program that is capable of measuring both the
individual components and the system as a whole. Since 1990, the World Council of Credit
Unions, Inc. has been using a set of financial ratios known as "PEARLS."
Each letter of the word PEARLS measures key areas of
CU operations: Protection, Effective financial structure, Asset
quality, Rates of return and cost, Liquidity
and Signs of growth.
The use of the PEARLS evaluation system accomplishes the following
Monitoring the performance of the credit union is the
most important use of the PEARLS system.
It is designed as a management tool that goes beyond the simple
identification of problems. It helps
managers find meaningful solutions to serious institutional deficiencies...
Evaluation Ratios and Formulas
The use of standardized financial ratios and formulas
eliminates the diverse criteria used by credit unions to evaluate their
operations. It also creates a universal
financial language that everyone can speak and understand...
The combined use of the standardized accounting system
and the PEARLS performance indicators produces a completely new type of
information: comparative credit union
In addition to its usefulness as a management tool,
the PEARLS system provides the framework for a supervisory unit at the National
Federation. National Associations can
use the financial ratios generated by PEARLS to conduct quarterly or monthly
analyses of all key areas of credit union operations...
Read more - Download the complete PEARLS Monograph