Profitability Analysis (CO-PA)

 

Profitability Analysis (CO-PA) enables you to evaluate your company’s profit or contribution margin by market segment or by strategic business unit (such as a sales organization or business area). Your market segments can be classified according to products, customers, orders, or any combination of these. Profitability Analysis provides your sales, marketing, product management, and corporate planning departments with information to support internal accounting and decision-making.

Two forms of profitability analysis are available:

  • Account-based profitability analysis stores costs and revenues in accounts and uses cost and revenue elements. This form of profitability analysis provides you with a profitability report that is permanently reconciled with financial accounting.

  • Costing-based profitability analysis groups costs and revenues according to value fields and costing-based valuation approaches, both of which you can define yourself. It ensures access at all times to a complete, short-term profitability report.

You can use both forms of profitability analysis in parallel. However, account-based profitability analysis is the default solution which is a prerequisite for Simplified Profitability Analysis. With account-based profitability analysis, any revenue posting or cost of goods sold posting is updated under the relevant account and assigned to the correct market segment characteristics.

Note Note

Account-based profitability analysis is permanently reconciled with Financial Accounting.

End of the note.

Nevertheless, you can also use costing-based profitability analysis if required. Note however that with costing-based profitability analysis, reconciling the Financial Accounting and Profitability Analysis applications requires more effort because the cost elements need to be transformed into value fields.

Features

Master Data

In CO-PA you can define your master data in accordance with your requirements. This data includes the units that you want to evaluate (characteristics) and the categories in which you analyze values. In account‑based profitability analysis the values are stored in accounts, whereas in costing‑based profitability analysis they are stored in value fields which you define.

Using the SAP master data (customer, product, customer hierarchy) or CO‑PA derivation rules, the system can derive additional characteristics based on the ones entered manually or transferred from primary transactions. A combination of characteristic values forms a multidimensional profitability segment for which you can analyze profit by comparing its costs and revenues.

Flows of Actual Values

The flows of actual values represent the most important source of information in CO‑PA. You can transfer both sales orders (only in costing-based profitability analysis) and billing documents from the Sales and Distribution (SD) application component to CO‑PA in real time. In addition, an interface program is available for the upload of external data. You can also transfer costs from cost centers, orders, and projects, as well as costs and revenues from direct postings (G/L account postings in FI, orders received in MM, and so on) or settle costs from CO to profitability segments.

Planning

In CO‑PA Planning, you can create a sales and profit plan. You plan in value fields and you can use automatic valuation to calculate planned revenues, sales deductions, and costs of goods manufactured based on the planned sales quantity.

The manual planning function lets you define planning screens for your organization. With these you can display reference data in planning, calculate formulas, create forecasts, and more. Planning can be done at any level of detail. For example, you can plan at a higher level, and have this data distributed downwards automatically. In automatic planning, you can copy and revaluate actual or planning data for a large number of profitability segments at once. You can also transfer planned sales quantities from (costing-based) CO-PA to Sales and Operations Planning (SOP) for the purpose of creating a production plan there.

Information System

The Information System enables you to analyze data from a profitability standpoint using the functions of the drilldown reporting tool. There you can navigate through a multidimensional data cube using a number of different functions.