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Definition of Direct Method of Cash Flow Statement

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Explanation Of Direct Method

As we know, any company’s financial statement has three important components: the balance sheet, income statement, and cash flow statement. The cash flow statement has three parts which are cash flow from operations (CFO), cash flow from investing activities (CFI), and cash flow from financing (CFF). Two direct or indirect methods can prepare this cash flow statement.

Under the direct method of cash flow statement, the cash flows from receipts and payments made during the financial period are listed. Then the cash outflows are subtracted from the cash inflows to calculate the net cash flow from a company’s operations. In the indirect method, net income is the starting point which is then adjusted for changes in different assets and liabilities either by adding or subtracting from the net income to arrive at the net cash flow from operations.

Example of Direct Method of Cash Flow Statement

Cash flow from operations in the direct method is presented in the following format:

Cash Flow from Operations

Cash collected from customers – $10000

Salaries and Wages paid – ($2500)

Cash paid to vendors – ($1500)

Interest Income – $700

Total cash flow before taxes – $6700

Interest paid – ($1000)

Taxes paid – ($700)

Net Cash Flow from Operations – $5000

Differences Between Direct and Indirect Methods of Cash Flow Statement

In the direct method, the cash flow statement from operations is calculated using only cash transactions such as cash spent and received. On the other hand, in the indirect method, cash flow from operations calculation is done using net income as the base. Then non-cash expenses like depreciation are added back, and non-cash income like profits from scrap sales are deducted. Also, a net adjustment is made between current assets and liabilities to reach the final cash flow from operations.

Another difference between the direct method and the indirect method is reconciliation. In the direct method, the separation of various cash flows from others is accomplished through reconciliation. In contrast, in the indirect method, the conversion of net income into cash flow is performed.

Non-cash expenses like depreciation and amortization are ignored in the direct method, while they are considered in the indirect method.

The direct method of preparing the cash flow statement does not require any preparations, whereas the indirect method involves a significant amount of preparation for converting income.

The indirect accuracy method is high due to a lack of required adjustments. An indirect method has low accuracy since many adjustments to the cash flows are required.

The direct method of cash flow statement takes more time to prepare than the indirect method.

Companies prefer using the indirect method since they are preparing a balance sheet and income statement based on accrual accounting, and the indirect method uses accrual accounting. If companies were to prepare a direct method of cash flow, they have to look at every transaction as a cash outflow or inflow.

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This has been a guide to the Direct Method of Cash Flow Statement. Here we have discussed the whole concept with examples and how it differs from the Indirect Method of Cash Flow. You may also look at the following articles to learn more:

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Cash Flow From Operations Formula

Cash Flow from Operations Formula (Table of Contents)

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Cash Flow from Operations Formula

Cash flow from operation is cash generated from operational activities like manufacturing or selling goods and services. Cash is a vital component for businesses as it is necessary for their operations. Some investors emphasize the cash flow statement more than other financial statements. The concept of elasticity assists in effectively managing cash flow. CFO focuses on the core business of the company. It does not include long-term expenditure, investments, etc. Cash flow from operation (CFO) is a sum of net income, non-cash items, and an increase in working capital or changes in working capital.

A formula for Cash flow from the operation can be written as follows:-

Where,

Net Income: Total income generated by a company

Non-cash Expenses: Short-term non-expense

Changes in Working Capital: Value of change in working capital

Examples of Cash Flow from Operations Formula

You can download this Cash Flow from Operations Formula Excel Template here – Cash Flow from Operations Formula Excel Template

Cash Flow from Operations Formula – Example #1

A company named Neno Plastic Pvt. Ltd, manufacture plastic boxes. The company has a net income of $ 45,000, the total non-cash expenses of the company are $10,000, and changes in working capital is $2,000.

As we know,

CFO = Net Income + Non-cash Expense + Changes in Working Capital

CFO = $45000 + $10000 + $2000

CFO = $57,000

So, the CFO value is $57,000 for the company.

The Cash Flow from Operations formula calculates financial figures based on the company’s specific needs, the parameters at hand, and the industry in which it operates.

Now, let us see those formulas.

Other Cash Flow from Operations Formulas-

When the company has all the details mentioned in the cash flow statement below formula is used, and for income-related values, the income statement is used. Here, CFO is the sum of funds from operations and changes in working capital. It can be expressed as:-

Here, operations funds are the sum of net income, deferred taxes & investment tax credit, depreciation, depletion & amortization, and other funds the company generates. So, funds from operations can be written as:-

Funds from Operations = Net Income + Depreciation, Depletion & Amortization + Deferred Taxes & Investment Tax Credit + Other Funds

Now, let us see an example to see its application.

Cash Flow from Operations Formula – Example #2

A company named MK Industries manufactures turbines. It has a net income of $100,000.00, machinery depreciation is $200,000.00, deferred taxes are $300,000.00, another fund company has $100,000.00, and a change in working capital is $10,000.00.

Calculation of Funds from Operations is as below:

Funds from Operations = Net Income + Depreciation, Depletion & Amortization + Deferred Taxes & Investment Tax Credit + Other Funds

Funds from Operations = $100,000 + $200,000 + $300,000 + $100,000

Funds from Operations = $700,000

Calculation of Cash flow from Operations is as below:

CFO = Funds from Operations + Changes in Working Capital

CFO = $700,000 + $10,000

CFO = $710,000

So, the cash flow from operations is $710,000.

Now, let us see another formula.

When there are fluctuations in the values of elements such as inventories, tax assets, accounts receivable, and deferred revenue over a specific period, these changes are accounted for in the cash flow from operations. In financial reporting, if there is an increase in asset values from one period to another, it is recorded as a cash outflow. Conversely, if there is an increase in liability values from one period to another, it is recorded as a cash inflow. In summary, this can be expressed using the following formula:

Cash Flow from Operations = Net Income + Depreciation + Adjustments to Net Income + Changes in Accounts Receivables + Changes in Liabilities + Changes in Inventories + Changes in Other Operating Activities

Let us see an example.

Cash Flow from Operations Formula – Example #3

Suppose a company named RK Industries manufactures auto parts. It has a net income of $1,500,000.00, depreciation of machinery is $200,000.00, deferred taxes are $200,000.00, changes in account receivable is $75,000, changes in liabilities is $100,000, changes in inventories is $10,000 changes in other operational activities is $25,000 and adjustment to income is $85,000.

Now, we will calculate the cash flow from operations for the company.

Cash Flow from Operations = Net Income + Depreciation + Adjustments to Net Income + Changes in Accounts Receivables + Changes in Liabilities + Changes in Inventories + Changes in Other Operating Activities

CFO = $1,500,000 + $200,000 + $200,000 + $85,000 + $75,000 + $100,000 + $10,000 + $25,000

CFO = $2,195,000.00

Hence, the cash flow from operation is $2,195,000.

Explanation

Cash flow from operation is the sum of net income, non-cash item expenses, and an increase in working capital or changes in working capital. That reflects cash inflow in a company. One can get it from the income statement of the company. The main component that shows cash flow is account receivable, inventory, depreciation, and account payable. The account payable is the liabilities account. Cash flow is affected by a company’s earnings, including its net income. Additionally, non-cash transactions are accounted for through non-cash accounts, and alterations in working capital are utilized to address the company’s short-term expenses.

There are some other ways too through which one can calculate CFO.

Methods to Calculate Cash Flow from Operation 

Direct Method

CFODirect = Cash Receipt – Cash Payment – Cash Expense – Cash Interest – Cash Taxes

Where,

Cash Receipt = Revenue from sales +/- Decrease in accounts receivable

Cash Payment = Cost of goods sold + Increase in inventory – decrease in inventory + Decrease in accounts payable – Increase in accounts payable

Cash Expense = Includes changes in operating activities.

Cash Interest = Interest Expense + Decrease in interest payable – Increase in interest payable

Cash Tax = Tax Expense + Decrease in taxes payable – Increase in taxes payable

Indirect Method

The indirect method adjusts as per changes in the balance sheet. CFO is the sum of net income, gains and losses from financing & investment, non-cash charges, and changes in operating accounts.

CFOindirect = Net Income + Gain & Losses from Financing & Investment + Non-cash charges + Charges in Operating accounts

Let’s see an example.

A company Kim Corporation has the below details. We will calculate CFO with both direct and indirect methods.

Account receivable $14,000.00

Inventory $2,000.00

Account payable $5,000.00

Sales $325,000.00

Gross Profit $200,000.00

Income Tax $16,000.00

Administrative cost $10,000.00

Depreciation $2,000.00

Gain & Losses from Financing & Investment $0

Net Income $300,000

Account receivable $14,000.00

Inventory $2,000.00

Account payable $5,000.00

Calculation with Direct Method–

Cash receipt = 3,25,000 – 14,000= $3,11,000

Cash Payment = 2,00,000 – 2,000 – 5,000 = $1,93,000

Cash Expense = 10,000 – 2,000 = $8,000

Cash Tax = $16,000

CFODirect = Cash Receipt – Cash Payment – Cash Expense – Cash Interest – Cash Taxes

CFODirect = $3,11,000 – $1,93,000 – $8,000 – 0 – $16,000 = $94,000

Calculation with Indirect Method:-

Suppose the initial value is zero.

CFOindirect = Net Income + Gain & Losses from Financing & Investment + Non-cash charges + Charges in Operating accounts

CFOindirect = $300,000 + $0 + $10,000 + $21,000 = $3,31,000

Significance and Uses of Cash Flow from Operations Formula

The uses of CFO are as follows:-

CFO helps to check the flow of cash in a business.

CFO helps to find the area of generation of cash and helps to maintain it.

It helps a company to make a financial decision.

A sufficient amount of cash is crucial for the efficient functioning of a business as it enables various opportunities such as business expansion, product launches, debt reduction, and timely payment of obligations. When a company effectively manages and utilizes its cash flow from operations, it is anticipated that the company’s share price will experience growth in the future.

Cash Flow from Operations Formula Calculator

You can use the following Cash Flow from Operations Calculator

Net Income Non-Cash Expense Changes in Working Capital Cash Flow from Operation Formula =   Cash Flow from Operation Formula = Net Income + Non-Cash Expense + Changes in Working Capital

0

+

0

+

0

= 0

Cash Flow from Operations Formula in Excel (With Excel Template)

Here we will do the same example of the Cash Flow from Operations formula in Excel. It is very easy and simple.

You can easily calculate the Cash Flow from Operations using the Formula in the template provided.

Cash flow from operations for Neno Plastic Pvt. Ltd is calculated as:

Cash flow from operations for MK Industries calculation:

Cash flow from operations for RK Industries calculation:

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This has been a guide to Cash Flow from Operations formula. Here we discuss its uses along with practical examples. We also provide you with Cash Flow from Operations Calculator with a downloadable Excel template. You may also look at the following articles to learn more –

Statement Of Retained Earnings Example

Definition of Statement of Retained Earnings

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Examples of Statement of Retained Earnings (With Excel Template)

Let’s take an example to understand the calculation of a Statement of Retained Earnings in a better manner.

You can download this Statement of Retained Earnings Example Excel Template here – Statement of Retained Earnings Example Excel Template

Statement of Retained Earnings – #1

FRY ltd had an opening retained earnings balance of $14,000 carried forward from the year 2023. In 2023, it earned an additional $54,000 after all expenses were paid. It was then decided that $30,000 would be paid to the shareholders as dividends. Below is the calculation involved in checking the retained earnings at the end of the year 2023:

Statement of Retained Earnings – #2

Chan Ltd started 2024 with an opening retained earnings balance of $2,340. It earned a net income of $14,890 during the year and paid a dividend to preferred shareholders amounting to $4,210 and the equity shareholders worth $3,640. There was also a prior period adjustment of $2,400. The retained earnings at the end of the year 2024 will be calculated as below:

The entity does not consider retaining earnings as a major source of funds. From the profit it earned during a year, it had a dual obligation to both the preferred and the equity shareholders, bringing down the amount that could have been retained. Also, prior period adjustments play a part in the ultimate retention. Companies must rectify any items erroneously passed in the previous year as prior period adjustments in the current year. They could either bring down or increase the profit in the present year.

Statement of Retained Earnings – #3

For a statement of retained earnings, apart from arriving at the closing earnings balance through opening earnings and profits for the year, it is also useful if one could calculate the cost of retained earnings. Surprisingly, retaining the profits instead of distributing them to shareholders as dividends is associated with an opportunity cost. Also, if an entity retains earnings instead of distributing them to the shareholders, it risks displeasing them. Therefore, it is imperative that a good return may come up using the earnings.

In general, if no other specific factors and variables are mentioned, the cost of retained earnings equals the cost of equity multiplied by a reduction in the shareholder’s tax rate. This assumption implies the absence of floatation costs.

This cost of retained earnings should be compared with the cost of raising debt from the market, and the decision to limit the retention percentage should be taken accordingly. Suppose the cost of raising debt is lower. In that case, the funds are easily available, and unlike retained earnings, it provides the taxation benefit to the entity; then, the preferred method of obtaining funds should be from external sources.

Conclusion

The statement of retained earnings is a good indicator of the health of the company and the ability to be independent in the future. Organic growth using the funds generated by itself is always a preferred form of growth over utilizing funds from outside. But, the quantum of the earnings cannot be a definitive conclusion. Some of the industries which are capital intensive depend a lot more on the retained earnings portion than the outside funds.

Retention is also a direct factor in the policy of the entity. Even though there are adequate profits, companies commonly have limited retained earnings as they distribute most of the funds among the shareholders as dividends. Again, market conditions give a direction to retained earnings. Emphasizing retained earnings becomes necessary if borrowing becomes expensive, even with limited profits.

Generally, the following become determinants in the retained earnings policy

The debt cost associated with raising funds from external sources

The dividend policy needs to be adopted in the foreseeable future. If the policy is a populist catering to large dividends, the entity has to cut down on the portion of retention.

For many concerns, the government or regulatory policies governing the entity become the primary source of checks to determine if the retained earnings are within limits.

Lastly, the nature of the industry to which the entity belongs and the traditional method of getting the funds plays a major role in making the retention decision.

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Learn The Examples Of Truncate Table Statement

Introduction to SQL TRUNCATE()

TRUNCATE in standard query language (SQL) is a data definition language (DDL) statement used to delete complete data from a database table without deleting it. It frees up space or empties space in the table. However, we should note that TRUNCATE TABLE statements might need to be roll backable in many SQL databases. Also, being a DDL statement, the TRUNCATE table statement does not require a commit at each step; it automatically fires a commit at the end of the execution of the statement. Hence, we should be careful while using it.

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Syntax and Parameters

The basic syntax for using a SQL TRUNCATE TABLE statement is as follows :

TRUNCATE TABLE table_name;

Table_name: It is the name of the table whose records or rows you want to delete permanently.

How does the TRUNCATE TABLE statement work in SQL?

TRUNCATE TABLE statement in SQL works by zeroing out a file in the database, i.e., after running a TRUNCATE statement on an existing table, the table becomes empty and hence does not hold any row records. It resets the table to zero entries.

However, its structure, columns, indexes, constraints, relationships, views, etc., are preserved after truncating the table. The entire operation is like erasing data from the table but keeping the table intact.

TRUNCATE in Data Definition Language (DDL) is equivalent to DELETE in Data Manipulation Language (DML). The only difference is that the latter can be rolled back, but the first cannot. However, TRUNCATE is faster than DELETE because it usually bypasses the transaction system. It is not logged (it can vary across SQL databases) and does not follow predicates and hence seems to be faster than the DELETE operation. DELETE is a safer and slower operation.

Examples of SQL TRUNCATE()

Here are a few examples to explain the TRUNCATE TABLE statement in great detail.

Example #1

Simple SQL query to illustrate the function of the TRUNCATE TABLE statement.

To understand the SQL TRUNCATE TABLE, let us consider a “customers” table. The data in the table looks like this.

Command:

SELECT * FROM public.customers

Output:

Next, let us run the TRUNCATE TABLE statement on the customer’s table to remove all its records. We can do so using the following SQL query.

Command:

TRUNCATE TABLE customers;

Output:

We can see in the figure below that the TRUNCATE TABLE statement has removed all the records in the customer’s table. However, all the columns, relationships, indexes, and table structures have been kept safe.

Command:

SELECT * FROM customers;

Output:

Example #2

For this, let us consider two tables, “customer_details” and “students”. The table structure and the data in them look something like this. Records in the “Customer_details” table are as follows:

Command:

SELECT * FROM public.customers_details

Output:

Records in the “Students” table are as follows:

SELECT * FROM public.students

Output:

Next, we will run the TRUNCATE TABLE on the customer_details table and DROP TABLE on the student’s table, and then we will check the difference.

Command:

TRUNCATE TABLE customer_details;

Output:

Command:

Output:

We can observe from the images above that the DROP TABLE statement is faster than the TRUNCATE TABLE statement in SQL.

Now let us check what happened to the two tables after truncating and dropping, respectively.

Command:

SELECT * FROM customer_details;

Output:

Command:

SELECT * FROM students;

Output:

From the above two images, we can observe that in the TRUNCATE statement, the table structure is preserved; only the data/records in the table have been removed. Whereas in the case of the DROP TABLE statement, the entire table has been removed from the database.

Conclusion

TRUNCATE TABLE in SQL is a Data Definition Language (DDL) statement that empties an existing table by removing all the records while preserving table columns, privileges, indexes, views, constraints, relationships, etc. It is equivalent to but faster than the DELETE statement in SQL. However, unlike DELETE, it cannot be rolled back.

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Difference Between Opacity And Flow

The fundamental distinction between ‘opacity’ and ‘flow’ would be that ‘opacity’ determines the limit of darkness in addition to opaqueness, whereas ‘flow’ controls how rapidly the color is applied. Imagine flow to be a dial that controls how much water flows from the faucet. If you use 100%, you obtain all of the colors in one shot, but when you select a lower Flow, you receive lighter streaks that aggregate until the opacity limit.

In Photoshop, Opacity is accessible in both layer settings and the navigation menu, while the flow is only accessible in the menu bar beside Opacity. The Opacity of any corresponding tool can be adjusted, whereas the flow feature can only be used on brush tools. Opacity is described as a typically transparent structure due to a body’s nature or state that renders it impenetrable to light rays

In contrast, flow is described as going in a stream to progress with a constant change of position among the individual particles. The brush menu shows Opacity and flows as decimal percentages. The percentage of the brush’s Opacity and flow can be adjusted. It has two alternatives: grow or decrease. When we select the brush tool, a slider displays that can be used to control the Opacity and flow of the brush as required.

Opacity controls transparency, while flow regulates the flow and stroke of a brush-style tool. Opacity can be applied to multiple layers, but it only impacts the topmost layer. At the same time, flow could be given to any layer as well as the intensity will gradually decrease as additional levels stack up the layer. “Flow” and “opacity” are similar words used in Photoshop or other laptop editing applications for sketching and painting tools currently available for digital creation and e-painting.

Read this article to find out more about Opacity and Flow and how they are different from each other.

What is Opacity?

Opacity is a feature in film imaging and software, specifically Photoshop, that allows transparency areas in an image or image layer by adjusting the light passage on a layer. The Opacity of a substance is the extent to which it restricts light. When more of the basic picture is visible, the Opacity of levels, filters, and effects may be adjusted

Regarding Photoshop editing, the brush tool benefits the most from varying the intensity of the ‘opacity’ function. This happens because you use the paintbrush for hiding, which is intended for the most complex changes in Photoshop.

The broad definition of Opacity is a region in a typically transparent construction inaccessible to incoming light because of the nature or condition of a body. It is a feature used in creativity and art to manipulate the lightness and darkness of the color or the whole layer.

When you change the Opacity of a level or a function, you make the surface or instrument effect less or more visible. An opacity of 0% signifies that the level of utility effect is fully transparent, 100% indicates no transparency, and 50% means that the surface or tool impact is 50% clear.

What is Flow?

The trace will gradually get darker, comparable to shading back and forth between pencils in the same location. Pushing firmly enough to make the pencil mark completely black is comparable to Photoshop’s 100% Flow option.

The more you go beyond a specific point, such as a low Flow setting, the more the ink accumulates. Once more, when masked in Photoshop, this is extremely handy

Another point to remember is that when using a low-flow option, you should employ a soft brush. The ink will come out of a pointed end if you employ a strong brush. Using a soft bristle brush, on the other hand, the ink will mix as it exits the paint.

Differences between Opacity and Flow

The following table highlights the major differences between Opacity and Flow −

Characteristics

Opacity

Flow

Meaning

An opaque region in a normally transparent change induced by a body’s nature or circumstance renders it resistant to light rays

The usual definition of the phrase ‘flow’ in English is to go in a stream, to progress with a constant

Visibility

Transparency is the opposite of Opacity. However, the opacity feature in many editing software packages can be used to adjust the transparency level

The flow option does have an indirect impact on transparency because it can be changed when using the brush tool.

Functionality

The opacity tool is employed to control layer transparency and regulate an image’s light intensity.

When the paint or stroke fills the layer, the flow function is used to adjust the intensity of the brush bristles.

Position

Select the layer from the Options menu. In the Layers option, enter a value ranging from 0 and 100 for Opacity, or press the button to the side of the Opacity box to move the Opacity slider, which appears instantly.

In Photoshop, the flow parameter is located next to the Opacity choice and controls the speed at which paint is applied.

Factor of Dispersion

Opacity does not affect the dispersion factor.

Flow setting can be used to modify and increase the dispersion factor

Conclusion

To summarize, both Flow and Opacity could be ideal Brush Tool choices, especially the flow tool. The difficulty is knowing how and when to use which choice. In Adobe, utilizing Opacity in Layers is extremely straightforward; simply drag the slider to create a somewhat opaque level. Whenever used in your tools, it is more hard and time- consuming to learn

The flow feature, in contrast, is restricted to the brush tool and strokes, which is an extremely aesthetically pleasing element to use, particularly for font insertion and drawing. Opacity and Flow could be an effective choice for Photoshop, and it is widely used in editing

Recycle Your Old Iphone For Cash

With people standing in line all over the world to buy the new iPhone 4, many are asking what they can do with their old iPhones. Since the price tag floats between $199 and $299, based on features, carrier plans, and whether you’re a new or existing iPhone subscriber, wouldn’t it be nice to recoup a bit of that investment while keeping an old device out of a landfill?

Well, maybe you and your small business can both save some money. Vendors from across the globe are offering cash or exchange offers for old iPhones, in addition to a variety of other handsets.

Some companies, such as NextWorth and Gazelle, offer to purchase your organization’s old phones in bulk, providing volume incentives for selling your used equipment to them. Each offer is different, based on the number of phones, their condition, accessories, and so forth, so you may have to call or e-mail to negotiate for the best deal.

Services that pay for iPhones

NextWorth has an iPhone trade-in program that, it says, “can fully subsidize the price of upgrading” from the iPhone 3Gs to the iPhone 4, plus, it offers cash incentives for referrals that result in additional sales. iPhone owners can trade up in any of NextWorth’s participating retail stores, such as Target, or use the online program, which has a 10-day turnaround for an old iPhone in good condition. The service provides pre-paid shipping labels, but its Web site doesn’t mention whether it wipes the old data, so be sure to clean your device before you let it go. For a functional, normal 16GB iPhone 3G without any cables or accessories, NextWorth offers $107.50.

For the same type of iPhone, Gazelle offers you $96. Gazelle pays cash for products in good condition, which they inspect on receipt, then determine the value and send you the cash. The company provides free shipping with packaging, and says it will wipe all devices clean of previous data. Turnaround with Gazelle is approximately one week after it receives your package.

Both NextWorth and Gazelle say they will pay up to $100 for the iPhone 3G models and $200 for 3GS models, if the devices are in good condition.

RadioShack also offers $100 for the 3G and $200 for the 3GS, but for in-store credit or gift card only. It sends the devices out to be wiped, and provides free shipping if you work through the Web site. Radio Shack will not accept devices with cracked screens, scratches, or water damage; the phone must be functional and disconnected from service. The company will accept phones without the battery and charger, but pays a little less for these devices.

Cash For iPhones

Eco New Direct quoted $85 for our old 16GB iPhone 3G. However, the service noted that the suggested price was based on visual inspection and could change if they were not satisfied with the device I sent in. After the online form asked for my my e-mail address, phone number, and address, it forced me to “accept” a terms and conditions contract that states once they receive my phone, it cannot be mailed back, which means if they decide it’s only worth $10, I have no recourse to change my mind. They do provide a shipping label for free shipping, but I wouldn’t use this service even if it was the only one available.

MyBoneYard had the same form as Eco New, and when I entered the same information for an iPhone 3G, it offered $148. Again, however, I was forced to “accept” a terms and conditions contract. It asked me to select the method of payment I prefer, from the single option of a prepaid Visa. Why ask, if there is only one option? And, once again, I had to enter my contact information before it would reveal the shipping arrangements, which are the same as those of Eco New. MyBoneYard offered a postage paid label that you can print and attach to the package.

Unlike Eco New Direct, this vendor offers more money and does not threaten to keep my phone if we cannot come to terms about what it’s worth. But, it doesn’t provide any valid contact information, so if I’m dissatisfied, I cannot contact them except through an online form. I refuse to do business with a company that doesn’t provide valid contact information, especially when it forces me to accept a terms and conditions contract.

BuyMyTronics looks a little better, and its online form isn’t static like some of the others. You can change the options on the form to see different prices. This vendor is offering $79 for a working, undamaged iPhone 3G with 16GB in fair condition with no other items included. It lists several shipping options, and says it will provide a free shipping label. Also, on the plus side, this vendor provides a full street address in Denver, but no phone number.

Alternatively, you could sell your iPhone to individuals on eBay or Craigslist . Prices vary based on condition and accessories, but shipping is rarely free and you’ll have to wipe the data yourself. If, however, you can sell it for quite a bit more through one of these services, you can ship it in a USPS flat rate box for under $5, so it might be worth it to try eBay or Craigslist.

Wipe the iPhone before you resell it

Even more important than cash in hand, data security should be your top concern when offloading an old iPhone used for work, so wipe that handset clean. If you don’t, you’re essentially handing your contacts, usernames and passwords, e-mails with clients and co-workers, Web browsing history, and saved meeting locations from Google Maps to a stranger.

If your device runs an earlier operating system, wiping your personal data may be less easy and thorough. There are several steps required to complete the erasure process.

You can purchase a program such as AirWatch Mobile Device & WLAN Management Software to wipe old iPhones before you resell them. For companies with tight security issues, this might be a better option.

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