Margin Analysis (CO-PA) in SAP S/4HANA

[nitin_gupta10]

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.

Comparison:

(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

Credit - SAP

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

Credit - SAP

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

First document

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

Credit - SAP

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.

Credit - SAP

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..

[thangarajthomas]

Hi Nitin Gupta,

Excellent  Overview on Margin Analysis (CO- PA) in S/4 HANA.

Thanks

Thangaraj Thomas

[former_member659912]

It's a great and impressive analysis and comparison blogs !!

 

thanks again ;

[former_member770668]

I have question ,Which fields can be changed later in the SAP Margin Analysis? In particular, it is about the fields material, customer hierarchy, product hierarchy. And if they can be changed, under what premises, what needs to be considered, what are the dependencies on in this ?

[former_member770668]

How are volume postings done in Margin Analysis? Are these "only" quantities that are posted via invoicing (ie invoiced quantity?) or can other quantities also be recorded? If so, how (with which app, transaction) and how many different quantity fields are there?

[former_member646925]

Hi

That's a very good document for margin analysis of sap cloud.

​Would you help to provide the confirmation/ instalation steps if client would like to go for margin analysis for cloud.

What are the detail steps to be followed?

Oss note implication?

Configuration steps? Etc

[Reynaldo_A]

Hi Nitin! Thanks a lot for sharing.

I have this question: If margin analysis (preivously Account Based COPA) is required to keep consistency of the universal journal, does this mean that its activation remains mandatory?

Thanks a lot in advance 🙂

[former_member410969]

Hi Reynaldo,

I just found this blog, but saw your question unanswered. I hope by now, you already got an answer elsewhere, but if not, let me try:

Margin Analysis is an available instrument in S/4HANA, but not needed to maintain consistency. If anything, the not so new changes to the data model (e.g. the introduction of ACDOCA or Universal Journal) ensures consistency in S/4HANA - compared to ECC versions of our Business Suite. While Financials was previously always different views manifested in its own (siloed) application (e.g.Cost Center Accounting, CO-PA, Subledgers), we now have a central "place" that records all Finance-relevant transactions. Therefore inconsistency (like we sometimes experienced in between those siloed applications) can't really occur anymore as nearly all applications write into and read from our central line item table ACDOCA or (not so technical) from the universal journal.

That also means that activation in a private cloud environment of S/4 isn't mandatory. In the public cloud version of S/4HANA, obviously, Margin Analysis is always active.

Best regards,

Lars

[Chendurapureddy]

sI have a doubt on Process order concepts and production orders, one of my client having an issue with orders, in KEU1  I created a CO-PA assessment Cycle based on , Sender is the one cost center and One cost element and Receivers , i am taking here product (Finished Good ), orders created in the t.code (CR01 ) and also taking the Division. when i am executing the Cycle in KEU5 its giving an error there no receivers.

and i taken as a base in Receiver Tracing factor is Cost Of Goods manufactured account.

here i am giving the some screenshots for your reference please advice me how i can allocate the cost based on process orders here my client is using the Account Based CO-PA.

KEU5 i am not the tracing factor in Quantity as i given in orders. how i can do this .please solve the issue 

please give me possible solution 

thankyou .