Margin Analysis (CO-PA) in SAP S/4HANA
COPA (Controlling – Profitability Analysis)
Profitability Analysis (CO-PA) enables you to evaluate market segments, which can be classified according to products, customers, orders or any combination of these, or strategic business units, such as sales organizations or business areas, with respect to your company’s profit or contribution margin. I will not get into more details as lot of content is available on internet.
Read here from SAP HELP
Cost based COPA
This type of Profitability Analysis is primarily designed to let you analyze profit quickly for the purpose of sales management. Its main features are, firstly, the use of value fields to group cost and revenue elements, and, secondly, automatic calculation of anticipated or accrual data (valuation). The advantage of this method is that data is always up‑to‑date and therefore provides an effective instrument for controlling sales.
Accounts based COPA
This type of Profitability Analysis enables you to reconcile cost and financial accounting at any time using accounts. In contrast to costing‑based Profitability Analysis, this type uses cost and revenue elements, which gives you a unified structure for all of accounting.
(definitions and image are taken from help.sap.com)
Margin Analysis (refined version of Account based COPA)
Margin Analysis is the refined version of Account based COPA. The Universal Journal combines financial and managerial accounting and directly records all dimensions including custom fields. Margin Analysis provides consistent financial information without any reconciliation needs along with a financial audit trail. All innovations developed for the Universal Journal are immediately available within Margin Analysis. A consistent approach ensures common usage of ledgers, currencies, valuations, predictions, and simulations, as well as their availability in planning and reporting.
All revenue and cost of goods sold postings are automatically assigned to the relevant dimensions at the time of posting. Also in further scenarios, including e. g. project sales, the new approach assigns profitability dimensions immediately. Together with real-time processing of former period-end procedures, this approach provides real-time visibility into margins during the period.
Its embedded in Universal Journal
A general comparison with Cost based COPA
This was the basic introduction of what is COPA or Margin Analysis. Now I will discuss some key features which are part of S/4HANA and provides real business benefit when it comes to reporting and getting details of financials.
COGS (Cost of Goods Sold) Split
With this functionality the details or the breakup of COGS is visible in accounting and this was not part of account based COPA in the past
Lets see the overview as how to set this up in system
IMG: General Ledger Accounting (New) > Periodic Processing > Integration > Materials Management > Define Accounts for Splitting the Cost of Goods Sold
Create COGS Split Profile
Maintain Assignment of Company codes
Define Source account
Map Target Accounts
Define Offsetting Account
Now the execution starts, when the user post the transaction, system posts 2 accounting document when Goods issue is posted to the delivery
Second document with split
Top Down Distribution
Top-down distribution is a special functionality in SAP Margin Analysis, in which the revenue or costs can be distributed from an summarized level to a more granular level which enables the profitability reporting.
Example – Revenues have product details but costs are book in general cost centers or objects. After Top down distribution cost is also allocated to the products in the ratio of revenues
Setting up dimensions is important for this
Real time Margin Analysis
In Margin Analysis SAP has introduced derivation of items without profitability segment which means that when cost is posted to Internal Order or Cost centre, based on settlement rules it will be visible in ACDOCA table on the end segment (which are actually the receivers in the settlement rules of Internal Orders and Cost Centres. You don’t need to wait for settlement cycle during the month end process.
Important to note that it will NOT appear in KE24 report till the settlement is executed
Example on Cost Center
Data visible in ACDOCA includes the COPA segments
Transfer Statistical Conditions from SAP SD
This is again a new functionality where the statistical conditions like warranty, cash discount (which are active) can be taken to Margin analysis. The statistical pricing condition is always posted as a posting document to an extension ledger of the financial accounting and not to the actual reporting ledger. Accounting looks like this where additional document is posted to extension ledger
Statistical document view
In summary the new improved version of COPA is offering a lot and is not almost as good as Cost based COPA. Also important to note that in the product roadmap of SAP, Margin Analysis is the only way to go and any improvements are limited to Margin Analysis.
Of course cost based COPA can still be activated but their are chances that it will not be supported by SAP in future so for any new implementation it is recommended to plan for Margin Analysis.
Keep reading, keep sharing knowledge..