With the use of Profitability Analysis, it provides the organizations with profitability related information on the performance of its sales channels. Profitability Analysis is used to support decision making, and planning for sales and marketing in an organization. Organizations can define their planning strategy based on the profitability analysis. Following are the key points about profitability analysis −
- The definition of a market is configured in the system by selecting the characteristics that are the subjects of analyses.
- Performance figures may be based either on profit and loss accounts (Account Based CO-PA) or freely-defined value Gelds (Cost Based CO-PA).
- Account-based CO-PA is the recommended approach.
- Cost-based is fully supported but is not integrated in the Universal Journal.
- You can use both approaches in parallel, for number of customers you have to evaluate if there is a need for cost-based CO-PA.
Real-time Account-Based Profitability
Following are the key features about account-based real-time Profitability Analysis −
- The Universal Journal as a single source of truth in Financials provides profitability attributes for every P&L line item.
- The Operating Concern generation appends the CO-PA characteristics to the Universal Journal.
- Profitability attributes are derived online.
- Profitability attributes can be enriched by further processes such as settlement or allocations.
Let us see how to check configuration of the Operating Concern.
Step 1 − Navigate to SPRO → IMG → Controlling → Profitability Analysis.
Step 2 − In Profitability Analysis, navigate to Structures → Define Operating Concern → Maintain Operating Concern.
Step 3 − In the next window, enter the Operating Concern value and click the Display button. You can select from different Operating Concern values.
Step 4 − When you click Display, in the next window you can see a Characteristics tab and a Value Fields tab (value fields are only used in Cost-Based CO-PA).
Step 5 − Click the Value fields tab to select it.
Step 6 − Check the attribute values and Environment by pressing the Back button or you can also press F3 to move to the back screen.
Step 7 − Click the Exit button at the top. Now let us see how to define Characteristic Derivation.
Step 8 − Select the Operating Concert and the type of profitability Analysis – Cost Based or Account Based.
Step 9 − Use the derivation tool to fill up your custom characteristics with values based on complex or simple rules. You can also maintain rule values or press F9 for the same.