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How does Total Cost of Ownership concepts strategically influence the financial performances of the Income and...

How does Total Cost of Ownership concepts strategically influence the financial performances of the Income and Cash Flow Statements

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If the company bears the total cost of ownership which means that there is no outsourcing and the company may be engaged in vertical integration it would impact the income statement and the cash flow statement in the following manner:

1. Overhead costs will increase.

2. The fixed cost will increase.

3. The machinery will depreciate over the years.

Hence for the income statement, the profits will decline and for cash flow statement there would be more expenditure in operating and investing category which will lead to huge cash outflow.

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