Margin analysis

-

The equivalent of account-based CO-PA in SAP S/4HANA is Margin analysis. Costing-based profitability analysis is still available in SAP S/4HANA but won’t be further developed.

  • Nearly every process generates a financial accounting document and/or document in profitability analysis, it’s important that you understand the value flows in order to configure profitability analysis properly.
  • Profitability analysis receives postings from previous components and enriches them with characteristics. Therefore, it’s very important to know where your data is coming from and how the processes are defined to make sure you receive the right data to analyze your data correctly. 

#Purpose: External view (cash, inventory, accounts receivables) & Internal view ( assign costs to the responsible cost objects and identifies the most profitable products and services ) .

#Concepts: 

  • Profitability segment is created when a document is transferred to profitability analysis.
  • Operating concern, which is the organizational unit for profitability analysis
  • Characteristics: When you define your reporting structure, you should think about the characteristics that you want to use for the analysis of your data to reveal information on the core of your business. You should ask yourself what the strategic goals for your business areand how profitability analysis might help you attain these goals.
    • Fixed, customer-specific
  • Value field: Value fields are only required in costing-based profitability analysis. Instead of accounts, costs and revenue are displayed on value fields.  

Account-Based Profitability Analysis and Margin Analysis

When creating a G/L account, you choose what type of G/L account you want to create.
  • Primary costs or revenues
  • Secondary costs
The cost element category defines the usage of the cost element. If this indicator is set, you can record quantities on the cost element during posting. The internal unit of measure must be set when the indicator to record the quantity is activated.

#Technical Setup of Margin Analysis
In SAP S/4HANA, the data of account-based profitability analysis and margin analysis is stored in the Universal Journal (table ACDOCA) in real time.

#Configuring the Operating Concern and Basic Settings for Profitability Analysis
Assign Controlling Area to Operating Concern ( Controlling • Profitability Analysis • Structures • Define Operating Concern • Maintain Operating Concern )
  • Type and Details (struct. )
SAP recommends using one operating concern and assigning all relevant controlling areas to this operating concern to allow for global reporting because the SAP standard doesn’t provide for the creation of reports across multiple operating concerns.

Define Operating Concern Currency
Assigning Characteristics to the Operating Concern:  assign characteristics up to a maximum of 60 characteristics

Assign Value Fields to Operating Concern: The assignment of value fields to the operating concern is necessary because both costing-based profitability analysis and margin analysis have been activated.

Activation of Profitability Analysis: Controlling • Profitability Analysis • Flows of Actual Values • Activate Profitability Analysis

#Currencies in the Operating Concern
In SAP S/4HANA Finance, on the other hand, the system converts all documents into the company code currency (currency type 10) and group currency (currency type 30). In CO of SAP ERP, you can use two currencies: company code currency and controlling area currency.

To determine the currency in the controlling area, call Transaction OKKP

SAP recommends assigning the group currency to the controlling area, as the group currency is usually used in all company codes, minimizing rounding differences. In addition, select the Diff. CCode Currency (different company code currency) checkbox to make the controlling documents available in the group currency and company code currency.

In SAP S/4HANA Finance, you implement the settings for the currency Overview of ledgers types in financial accounting for each ledger separately.

#Creating an Extension Ledger for Profitability Analysis
An extension ledger can’t live on its own, it always references a standard Reference ledger ledger. The extension ledger inherits the basic settings of the underlying ledger, such as assigned currency types. 

Defines how the extension ledger can be used. To use the extension ledger for predictive accounting in margin analysis, choose Line items with technical numbers/no deletion possible.

After creating the extension ledger, you need to check the company code settings. In the Dialog open the Company Code Settings for the Ledger folder.

Now save the entries, and the system automatically creates a ledger group for the extension ledger in the background.

#Creating Number Ranges for Profitability Analysis
#Assigning Versions to the Operating Concern
 When controlling areas are created, the system automatically creates version 0 to store planning and actual data

#Set Operating Concern
To avoid this, you can set the operating concern in your user parameters by calling Transaction KEBC.

#Configuring Characteristics
To see the data structure, use Transaction KEA0.

Transaction KEA5 can be used to create, change, and display characteristics.
Assigning Characteristics to the Operating Concern (KEA0)

#Characteristics Derivations (KEDR)
  • Derivation rule: it enables you to derive characteristic values on the basis of various combinations of characteristics.
  • Table look up
  • Move
  • Clear
  • Enhancement
The sequence of characteristic derivations plays a very important role. The system executes the characteristic derivations from top to bottom. 

KES3: In costing-based profitability analysis and margin analysis, you can use characteristics hierarchies to group characteristics.

After the characteristics hierarchy has been created and saved, it’s available for use in profitability reports.

#Characteristic groups help automate the characteristic derivation for cost objects being settled to both costing-based profitability analysis and margin analysis to ensure that the correct characteristics get derived when the internal order is settled.

Assign Characteristic Group to Entry Screen KE4G.

#Generating Settlement Rules Automatically

Settlement rules are required to settle balances on cost objects at month end to costing-based profitability analysis and margin analysis. To facilitate and accelerate month-end closings, you can generate settlement rules automatically, for example, in internal orders. This way, you don’t have to rush and maintain missing settlement rules at month end because they will be created automatically.

Settlement rules are required to settle balances on cost objects at month end to costing-based profitability analysis and margin analysis. To facilitate and accelerate month-end closings, you can generate settlement rules automatically, for example, in internal orders. This way, you don’t have to rush and maintain missing settlement rules at month end because they will be created automatically.


The first step is to create a characteristic group in configuration by going to Transaction KEPA or using the following configuration path: Controlling • Profitability Analysis • Flows of Actual Values • Initial Steps • Characteristic Groups • Maintain Characteristic Groups.

#Realignment of Characteristics (KEND)

What if you realize that your characteristic derivation was set up incorrectly, and all your profitability segments have the wrong characteristic derived?


Configuring Value Flows for Margin Analysis

#Predictive Accounting

The objective of predictive accounting is to advise and support company's strategy through predictive and prescriptive analytics.
  • Top-down predictions (predictive analysis): It’s used to predict the future values by considering trends, cycles, and fluctuations.
    • Sales
      • Creation of an extension ledger and activation in margin analysis ( Financial Accounting • Predictive Accounting • Activate Predictive Accounting for Sales Processes )
      • Define the sales order item categories for which the predictive journal entries will be created (  Financial Accounting • Predictive Accounting • Activate Predictive Accounting for Sales Order Item Categories )
      • If the Overall Status is blocked, for example, no predictive journal entry is created.
      • ACDOCA: If the document status (BSTAT) is P, the document is a predictive journal entry. It will be changing with GI an Billing postings.
      • Predictive journal entries can get archived with archiving object FINS_PRED.
      • With report FINS_PRED_FIN_REDUCTION, those differences are cleaned up, and a zero predictive balance for completed orders is guaranteed. 
      • Repost previously created sales orders into predictive accounting with report FINS_PRED_REPOST
      •  Fiori App to Display Predictive Accounting Documents
  • Predictive Accounting Commitment Management
    • The logic for the predictive journal entries for purchasing documents will be the same as for sales orders. The objective is to be able to simulate goods receipt, invoices, and even purchase requisitions.
    • Extension ledger: Relevant for Availability Control
    • Table COOI (Commitments Management Line Items) & Cost center and projects in table ACDOCA (Universal Journal)
  • Billing Data Transfer
    • Price determination in the sales order uses the condition technique to determine the price of the material.
    • Activate Transfer of Statistical Sales Conditions, SM30: FCOV_STAT_ACT ( Assign Ledger Group to Transfer of Statistical Conditions )
    • A new accounting document with the extended ledger is created for the statistical conditions
  • Costs of Goods Manufactured in Margin Analysis
    • The material and labor cost are posted on the production order based on the actual consumption. After the production of the product is finished, the product is posted into inventory. The value of the posting is determined by the price in the material master of the finished product. This price can differ from the cost that occurred for the production of the product. There can be various reasons for a difference in price, such as scrap, price differences, differences in labor, and so on. At month end, the production order is settled. 
    • The production order isn’t yet finished, but there are costs on the production order. Before the settlement of the production order, you need to determine work in process (WIP) OR The production order is completed.
  • Cost of Goods Sold ( Split )
    • COGS are posted in financial accounting and margin analysis when the goods issue to a delivery is posted.
    • GBB-VAY (GBB stands for Offsetting Entry for Inventory Posting and VAY stands for Goods Issue for Sales Order).
    • + split these costs according to the components of the cost component structure of the material cost estimate that has been used for inventory valuation.
      • Create a G/L account with cost element category 1 for every cost component of the cost component structure
      • SPRO: Financial Accounting • General Ledger Accounting • Periodic Processing • Integration • Materials Managment • Define Accounts for Splitting the Cost of Goods Sold.  Maintain a target account for every cost component of the cost component structure
      • It will be a separate accounting document after GI.
  • Variance Calculation
    • Allocation cost center: collect all costs on one cost center and allocate them at month end with a cost center assessment to other cost centers based on various criteria, for example, the size of the site
    • Service cost center: Service cost centers get allocated to cost centers they are providing services for, similar to the allocation cost centers
    • Production cost center: assign the total production costs to the goods manufactured so that at month end, the balance of the cost center equals zero.
    • Production order...
      • the system resolves the bill of materials (BOM) and routing to determine the target costs of the order.
      • with goods issued on the order and confirmations of hours for the production order, costs are debited to the order
      • after the production is complete and the order shows a balance, this is referred to as a variance: more or fewer material components were consumed, more or fewer working hours were necessary, or price fluctuations occurred for material components. These variances are determined at month end and are settled to margin analysis.
  • Direct Account Assignment
    • If you assign scrapping costs to cost centers, the information on the material is lost when the cost center is allocated to margin analysis at month end. If you assign scrapping costs directly to a profitability segment and hence margin analysis, you can also transfer the information on the material and quantity to margin analysis.
    • SPRO:  Controlling • Profitability Analysis • Flows of Actual Values • Direct Postings from FI/MM • Automatic Account Assignment: Instead of assigning a cost center or an internal order, select the checkbox in the PrfS (profitability segment) column
    • Create a Journal Entry with Direct Account Assignment: select any characteristics assigned to the operating concern for the profitability segment
  • Attributed Profitability Segments
    • Create statistical profitability segments with every posting you create in financial accounting if the account assignment object has a settlement rule to margin analysis
    • It  considers the characteristic derivations created in Transaction KEDR.
    • SPRO: Controlling • Profitability Analysis • Master Data • Activate Derivation for Items without Profitability Segment.
  • Cost Center Assessment
  • Order Settlement

Planning


Reporting

Predictive Accounting

Predictive Journal Entries are only created in the Extension Ledger, that is sitting on top of the Leading Ledger. 
  • SAP Fiori App: Display Predictive Accounting Document SAP Fiori app
  • SAP Fiori App: Display Financial Statement Versions
  • SAP Fiori App: Monitor Predictive Accounting
  • SAP Fiori App Incoming Sales Orders (Predictive Accounting)

Show Line Items
Profitability Analysis Reporting
Other Reporting Possibilities with Development

Comments

Post a Comment