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The difference between PCA factor & PCA distribution?

  • 5 October 2021
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D
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Hi,

 

Could you please help me understand the difference between a PCA factor & PCA distribution?

 

Best Regards,

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Best answer by Thomas Peterson 5 October 2021, 16:33

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A
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Hi

I think it is obvious. Factor allows you to post in PCA part of source balance (0-100%). 

Distribution is a key to divide selected balance into several lines (with different code parts). 

You can combine factor and distribution in single PCA line, distributing part of source balance. 

Regards, Adam
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Thanks for clarifying Adam, I’m glad it was so obvious!

T
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Hi Dennis, 

I get that question every time I do PCA training.  If you know PCA really well, the difference is obvious, but for people who are new to PCA, not so obvious. 

A factor is a single value. It can be any number (not limited to 1-100).  For example 42% or 2000.  The factor is use for multiple purposes but take certain account balances (or balance) and multiply by a factor to get a result. 

Distribution always totals 100%.   You have different values in a distribution for example CC1 10% CC2 20% CC3 30% and CC4 40%.    The values total 100%.    The purpose of the distribution would be to take a balance and allocate 100% of that into the 10, 20, 30, and 40 percent values.  

For a complete allocation solution - assume we want 50% of account X and allocate that result into CC1, CC2, CC3,  CC4 based on 10, 20, 30 and 40 percent.    This would be a combination of factor and distribution. The factor takes 50 % of X.  The distribution allocates the (50% of X) into the CC1, CC2, CC3, and CC4. 

Hope this helps,   FYI, PCA is one of my favorite IFS tools - 

Best regards, 

Thomas

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Hi, 

I wanted to expand on that.  Both Factors and Distributions can be automatic or manual. 

If manual - the user keys the values - Factor 42% or distribution, 10, 20, 30, 40 %. 

If automatic a factor will take account balance (or balances) X / other account balances Y using numerator and denominator designations.  The math  results in a single value. 

The automatic distribution captures multiple balances, for example balances by cost center or product, or departments, or accounts and combinations of these.   Then calculates the percent's of the total for a given product, cost center, department etc. The individual values (%) always total 100%. 

Best regards, 

Thomas

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Thanks for the detailed response @Thomas Peterson !! This was very helpful!

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