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Profitability analysis is used for analysing the profit into different product lines wise, product mix wise,

sales men wise etc., This is more of analysing the profit at minute level instead of at plant level, sbu
level which is available at PCA level.
COPA is more to do with specific business segments like, for a particular product line in a sales area
how much is the profit?
Whereas in the case of COPA, we get Product profitability upto Net income before Corporate tax. The
Cost of Sales is matched with the revenue to get the gross margin per each product as well as
marketing segment. Then selling overhead and Corporate expenses are allocated to the products on the
basis of revenue and we get EBITDA(Earnings before Interest, Debenture interest and tax. The Longterm Interest and debenture interest shall also be allocated to the products equitably. Consequently, it is
able to know the profitability of the products before payment of tax.
Profitability Segment corresponds to market segment. The market segments can be defined as
products, product groups, customers, customer groups, geographic areas, etc. For example, a company
may wish to analyze profitability for a specific group of products that the company sells to a particular
customer (or group of customers). When setting up CO-PA, the company will have broad flexibility to
choose whichever characteristics are relevant for defining the company's market segments. Each
unique combination of characteristic values (e.g. sales of product A to customer X) defines a profitability

PCA is used for drawing the financials at responsibility center wise say at plant level, operating lines
wise etc., It is used for comparing the different SBU's performance and analysis. It is also useful for
drawing financial statements more for internal MIS purposes.
Strategic business unit (SBU) is a profit center which focuses on product offering and market segment.
SBUs typically have a discrete marketing plan, analysis of competition, and marketing campaign, even
though they may be part of a larger business entity.
Profit center accounting is used where a company code has branches or divisions or segregation based
on product, Say Motor cars, Tractors, 2 wheelers etc.
Profit Centers can be set-up to identify product lines, divisions, geographical regions, offices, production
sites or by functions. Profit Centers are used for Internal Control purposes enabling management the
ability to review areas of responsibility within their organization.
In Profit Center Accounting Costs and Revenue are matched to find the profitability of the Investment
Center. The shared services expenses are allocated equitably in between the profit centers to find the
accurate ROI of the Investment Centers. Here you will get the Segmental Profit and loss account.
Profit centers are internal areas of a company that have the responsibility for achieving target profits or
productivity goals. The objective of business area is more for reporting purposes whereas profit center
allows to analyse areas of responsibility and to delegate responsibility to decentralised units (eg., the

various divisions within a company). Thus, profit center are basically treated as "companies within a
company" and ensures effective control.

But the edge profit center has over Business area is that you can do assessment and distribution cycles
between profit centers. This is not available in Business Area. Hierarchical structure for profit center can
be created. Hierarchical structure for business area is not possible.
We can create Balance sheet & P&L account statement in Business area as well as Profit Center but
with the difference that in case of Business Area we cannot include G/L a/cs like Cash, Tax, Provision for
taxation, Bank & similar a/cs & so it'll not give correct reports. In case of Profit Centers all the accounts
can be included.