Last Updated on May 21, 2023 by Pradeep
SAP Margin Analysis
SAP margin Analysis is the new version of SAP Profitability Analysis. You can say that SAP CO-PA is revolutionized in S/4HANA with Margin Analysis. Thus, it gives you a snapshot of your Management Reporting. You not only get insights into the past and present but also into the future.
Understand the concept of SAP Profitability Analysis – CO-PA
SAP Profitability Analysis functionality is designed to meet the requirements of internal profitability analysis processes. It enriches actual and planned data with additional characteristics that can be freely defined and allow for detailed analysis.
Most importantly, the Reporting in SAP Profitability Analysis is very flexible. Therefore, its design is based on your specific needs.
SAP Margin Analysis in Relation to SAP Profitability Analysis
In any organisation, Processing and Analyzing data is one of the most important tasks. Since the Controlling in SAP S/4 HANA provides CO-PA without any structures and master data. Thus, you can structure and configure COPA as per your specific requirements.
An example of this is Standard Reports.
Similarly, the Margin Analysis in SAP provides the freedom to design and structure your Profitability Analysis. Additionally, there are more pre-configured and pre-designed functionalities you can take advantage of.
You rarely create postings in SAP Profitability Analysis directly. Instead, profitability analysis receives postings from previous components. Then it further enriches them with proper characteristics.
Therefore it’s very important to know where your data is coming from and how the processes are defined. This subsequently helps you to receive the correct data and analyze it correctly.
Related: CO-PA Process Flow in SAP FICO (ECC)
Types of SAP Profitability Analysis
There are two types of profitability analysis in SAP S/4 HANA.
- Costing-based CO-PA and,
- Margin Analysis (Account-based CO-PA)
The functionalities of Margin Analysis are evolving significantly with almost every new release. And so is in version SAP S/4HANA Finance 2022.
Costing-based SAP Profitability Analysis is still available in SAP S/4 HANA However, it has also been developed further.
Let’s understand the difference between these two types of Profitability Analysis.
As mentioned already, Costing-based COPA and Accounting-based COPA, both are available in SAP S/4HANA. However, if you are implementing SAP S/4HANA Cloud, you can only activate Margin Analysis. Here, the Costing based COPA is not available.
You must know, now the Account-based COPA has been renamed Margin Analysis.
You may be interested in: SAP Controlling Interview Questions
Costing-Based CO-PA
in SAP S/4HANA 2022, no changes have been made to the data model, setup and usage of costing-based CO-PA. Though, SAP still supports the usage.
So, to set up a costing-based profitability analysis, you have to define characteristics and value fields.
Characteristics – include company code, customer and so on.
Value fields – are groupings of costs and quantities such as sales, material costs and sales amount.
The structure in profitability analysis reporting is defined by value fields.
Costing-based Profitability Analysis Table
| Value Field Code | Value Field Name | Amount |
|---|---|---|
| VV010 | Sales | 100000 |
| VV030 | Customer Discount | 20000 |
| Net Sales | 80000 | |
| VV140 | Cost of Goods Sold | 50000 |
| VV400 | Var. Production Cost | 10000 |
| Gross Margin | 20000 | |
| VV713 | Advertisement | 7000 |
| VV444 | Sales Admin Cost | 5000 |
| Net Margin | 8000 |
Related: Product Costing in SAP
It follows a P & L statement in cost of sales accounting or contribution to the margin report.
Since the Profitability Analysis does not use General Ledger Accounts. So, you must use value fields to define the structure for your reporting.
This means, there should not be 1:1 G/L accounts and value fields.
What is a Value Field?
A value field symbolizes a group of costs, that you can drill down and display on a profitability segment level.
SAP Margin Analysis – Account-Based CO-PA
Account-based COPA has not been used that much in SAP ERP as it was lacking a lot of functionality compared to costing-based COPA. Although some users ran account-based CO-PA in parallel to costing-based CO-PA as it has the reconciliation benefit of COPA with GL.
While the Account-based COPA was based on cost elements in SAP ERP, in S/4 HANA Management Accounting, the Cost Elements became G/L accounts.
Account-Based Profitability Analysis
| G/L Accounts Code | G/L Accounts Name | Amount |
|---|---|---|
| 4000 | Sales | 100000 |
| 5001 | Customer Discount | 20000 |
| Net Sales | 80000 | |
| 1001 | Cost of Goods Sold | 50000 |
| 1002 | Var. Production Cost | 10000 |
| Gross Margin | 20000 | |
| 1010 | Advertisement | 7000 |
| 1011 | Sales Admin Cost | 5000 |
| Net Margin | 8000 |
You need to do a very less configuration in the Margin Analysis than the Costing-based COPA.
After you activate the Margin Analysis, the system automatically assigns a profitability segment to most of the transactions.
Further, you get some functionalities that allow you to split costs in Margin Analysis or predict outcomes.
Key points to mark for Margin Analysis:-
- Cost Elements integrates into G/L accounts.
- After margin analysis is activated, values are easily transferred to Margin Analysis without much configuration.
- We recommend activating margin analysis when implementing or transferring to SAP S/4 HANA.
- Margin Analysis is surely expected to get additional functionality in future releases.
Traditional CO-PA Vs. SAP Margin Analysis
There are many upgrades in the Margin Analysis of SAP S/4HANA Finance. The following table gives you a quick overview of those new features.
The Key Factors of SAP Margin Analysis
Following are the key factors of SAP Margin Analysis that make it special in SAP S/4HANA 2022.
360-degree insights:-
The above comparison between different forms of Profitability Analysis clearly shows that Margin Analysis has already been enriched with new functionality. Thus, it delivers 360-degree insight into financial performance.
Lowering Operating Concerns:-
Certainly, the objective for the future is to completely separate Margin Analysis and Costing-based Profitability Analysis. It wants to deliver a Margin Analysis without operating concerns based on the field catalogue of the Universal Journal.
Real-time storage in ACDOCA:-
In S/4 HANA, the data of Account-based Profitability Analysis and Margin Analysis is stored in the Universal Journal (ACDOCA Table) in real-time.
Simplified Reconciliation:-
The integration of margin analysis into the universal journal table provides many advantages such as adding further characteristics to the Universal Journal, storing data in real-time and providing simplified reconciliation with financial accounting.
Better Profitability Reposts:-
Moreover, you can see an extract of the Universal Journal (table ACDOCA) showing some actual line items for the profitability report.
Why use SAP Margin Analysis?
If any business has used costing-based profitability analysis so far, I recommend activating SAP Margin Analysis because this is the only form of Profitability Analysis that SAP will enhance in the future and provide additional functions for.
From the SAP consultant’s point of view, since this Margin Analysis is getting much attention and working in SAP Profitability Analysis, so for you too, it becomes equally important to embrace its good knowledge for better work performance. Not only for professionals but beginners too, it is always a good decision to adopt trending things and learn important tools on the SAP S/4HANA Kit.
In this blog, we discussed what’s new in SAP Profitability Analysis in S/4HANA 2022 with Margin Analysis. We also understood the difference between costing-based profitability analysis and margin analysis. So, this is an overview of what consultants have to do in the new SAP Profitability Analysis 2022. It also means you need to work on the practical front along with theory to get this topic well.
Watch Video: SAP CO-PA – Account-Based and Costing based – Practical Demonstration
