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CIPS L4M4 Exam Syllabus Topics:
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NEW QUESTION # 18
Which of the following would you use to work out a company's gearing ratio? Select TWO.
0current liabilities
- A. net profit
- B. shareholder equity
- C. long term debt
- D. gross sales
Answer: A,C
Explanation:
Gearing measures how much of an organisation's long-term funding is made up of long term debt and loans.
Therefore the correct answers are 'shareholder equity' and 'long term debt'.
There are many question about financial ratios that can come up on the exam. If you're unsure on them I suggest doing further reading outside of the study guide as this will help. I like this youtube video (I'm not associated with the makers of this video but think they're really good at explaining things to beginners) Gearing Ratio explained (youtube.com)
NEW QUESTION # 19
Mark is a category manager responsible for buying large pieces of laboratory equipment in the public (government) sector. Which of the following Incoterms would ensure that an overseas supplier is responsible for paying all delivery costs, including import duties and taxes for these goods?
- A. DDP
- B. FAS
- C. EXW
- D. DPU
Answer: A
Explanation:
DDP (Delivered Duty Paid) requires the supplier to cover all delivery costs, including import duties and taxes.
This term ensures that the buyer receives the goods without additional charges, aligning with public sector procurement practices for cost-effective and transparent sourcing.
NEW QUESTION # 20
The International Chamber of Commerce (ICC) publish a list of commercial rules known as Inco-terms. What is the purpose of these rules?
- A. to provide internationally recognized product descriptions
- B. to describe the point at which an item is considered delivered
- C. to state which products can be exported from which countries
- D. to ensure buyers and suppliers pay the correct level of tax on imported and exported goods
Answer: B
Explanation:
Incoterms describe the point at which an item is considered 'delivered' and explains who has the risk of what during the transport of the goods.
NEW QUESTION # 21
Which award criteria can be applied when sourcing requirements from external suppliers?
- A. Plans and manpower numbers
- B. Delivery promises of goods
- C. Understanding of supplier operations
- D. Price and total life-cycle costs
Answer: D
Explanation:
Evaluating total life-cycle costs, including initial purchase price and long-term maintenance, aligns with ethical sourcing by promoting cost-effective and sustainable procurement. It ensures value for money and supports environmentally and financially responsible sourcing practices.
NEW QUESTION # 22
An organisation is keep to include Social Outcomes in it's assessment for Value for Money for a new tender.
Which of the following should be considered?
- A. accreditations such as Fair Trade
- B. use of local labour to deliver the contract
- C. supplier's ESG policy
- D. CO2 emissions of the supplier's delivery vehicles
Answer: B
Explanation:
Social value is about benefitting the local community / society. Therefore of those options listed, use of local labour is the most appropriate to consider.
NEW QUESTION # 23
A company has a low gearing of 20%. This shows that the company relies on equity capital and should therefore have less difficulty coping during tough economic times. Is this statement TRUE?
- A. Yes- a low gearing ratio means the company's finances are made up of equity rather than debt
- B. Yes- a low gearing ratio shows that the business is solvent and can deal with supply chain disruptions easily
- C. No- a low gearing suggests that the company is financed by long-term debt rather than equity
- D. No- a low gearing shows you that a company isn't likely to be profitable
Answer: A
Explanation:
the correct answer is 'Yes- a low gearing ratio means the company's finances are made up of equity rather than debt'.
Remember low gearing = good (based on equity), high gearing = bad (based on debt). Anything over 50% is considered high.
The two no answers are therefore incorrect and you can discount these straight away. The other yes answer is one of those answers which COULD be true, but isn't always true, and we'd need more information to know for sure. When you get options like this there will be one that is always right and one which is sometimes right - so always pick the always right one.
Dealing with supply chain disruptions is complex, and depending what the disruption is, how big it is, what the industry is etc determines whether a supplier can handle it or not. Because there's more factors to consider than just gearing, this isn't the right answer.
NEW QUESTION # 24
Pre-qualification of suppliers is used to determine if the suppliers meet the basic requirements of the buying organisation. Which of the following is assessed at the pre-qualification stage?
- A. pricing structure, ethics and financial stability
- B. financial stability, capacity and capability
- C. capability, culture and pricing schedules
- D. capacity, capability and pricing structure
Answer: B
Explanation:
The correct answer is financial stability (this is done by using all of those lovely ratios in chapter 1.3) and capacity and capability (which are part of Carter's 10 Cs).
At PQQ stage you're looking purely at whether the supplier is good or bad (to put it simply). You don't give them details of your requirement yet, so they're not providing a quote / pricing structure / price schedule at this point in time. That would be at the next stage, IF they pass PQQ, when you issue the tender competition.
NEW QUESTION # 25
Luke has sent out a Request for Information to test the waters of the supply market for a new product he is sourcing. He has received a high number of detailed documents back from suppliers. Which of the following is Luke now likely to know about the marketplace? Select THREE
- A. expected changes in the marketplace
- B. samples of the product
- C. acceptable lead times
- D. exact costs of the item he's procuring
- E. amount of product competition
Answer: A,C,E
Explanation:
The correct answers are; lead times, product competition and changes in the marketplace.
You wouldn't expect to receive samples or costings from a Request for Information - rather, these should be expected as part of the Tender Competition
NEW QUESTION # 26
Tendering is a more formal and regimented process than sending out requests for quotations. Which of the following are services that are often put out to tender? Select THREE.
- A. provision of raw materials
- B. security
- C. cleaning
- D. office supplies
- E. consultancy
Answer: A,C,E
Explanation:
security, consultancy and cleaning are services which are often tendered as they tend to be high value and complex opportunities.
Office supplies and raw materials have less variables so you could use a RFQ for these instead.
A hint for this is also the word services. Security, consultancy and cleaning are services. Raw Materials and Office Supplies are goods.
NEW QUESTION # 27
Dylan is looking to appoint a new supplier of paint to his manufacturing business. The paint will be used to paint buses and taxis and therefore needs to be high quality and durable. Which of the following should Dylan look for in terms of quality management when appraising the suppliers?
- A. ISO9001
- B. Carter's 10 Cs
- C. conformance specification
- D. ESG
Answer: A
Explanation:
ISO9001 is Quality Management so is therefore the correct answer. The other options can be used to appraise suppliers but do not link directly or fully to Quality Management.
NEW QUESTION # 28
Raja is a procurement manager who is keen to gain further insight into the current marketplace and whether local suppliers are capable to provide a service he is looking to procure. He wishes to test the market before he begins a formal tender process. What should Raja do?
- A. conduct an open competition
- B. speak with his current suppliers
- C. send out a RFQ
- D. send out a RFI
Answer: D
Explanation:
Raja should send out a RFI- request for information; this will allow him to gain feedback from the marketplace prior to tender.
Speaking only with current suppliers will not provide all the information Raja requires.
He should not send out a request for quotation since he is still conducting market research An open competition would be how he can procure, after he's completed his research
NEW QUESTION # 29
In a negotiation, a supplier does not want to upset or offend the buyer, so concedes their own requirement in order to ensure harmony. Which negotiation tactic is the supplier using?
- A. collaborative
- B. accommodating
- C. compromising
- D. competitive
Answer: B
Explanation:
This is accommodating: the supplier puts the buyer's interest above his own.
This is from the Thomas Killman model of conflict resolution. There are 5 strategies; competitive, collaborative, avoiding, accommodating and compromising. In the study guide it doesn't mention the name of the model but you do need to know the 5 strategies. The model comes up a lot in other modules so is a good one to learn. Particularly L5M1 which is about management theory.
NEW QUESTION # 30
Which of the following Incoterms has the lowest risk for the supplier?
- A. delivered at terminal
- B. delivered duty paid
- C. ex works
- D. free on board
Answer: C
Explanation:
Ex-Works has the lowest risk to the supplier- in Exworks the buyer collects the items directly from the supplier - so they have all the issues and risks of transporting it back home.
There are many question on Incoterms CIPS can ask. But as there's such a huge bank of questions it's really hit or miss if you'll get one of those question. Two students sitting the exam at the same time in the same study centre can get different question sets. One person can get 3 Incoterm questions and the other gets 0.
I would learn the major ones- the ones at the ends of the table in particular because these are the ones question are likely to be about. Ex works / Free carrier and Delivered at Place Unloaded/ De-livered Duty Paid in particular.
I like this graph as I'm a visual person. I think it makes it easier to understand than the study guide:
Shipping Incoterms: the Complete Guide - Guided Imports
NEW QUESTION # 31
In which circumstances would a procurement manager effectively use competitive tendering for the award of contracts?
- A. When the specification is likely to be continuously reviewed as the contract progresses
- B. When the requirement is needed urgently and price is not the most important factor
- C. When the suppliers have technical expertise, and the value of the procurement is relatively high
- D. When the value of the procurement is high and special tooling is a major factor
Answer: C
Explanation:
Competitive tendering is ideal for high-value contracts where technical expertise is essential. This method supports responsible sourcing by ensuring quality and aligning the supplier's capabilities with the buyer's needs, as required in more complex procurement scenarios.
NEW QUESTION # 32
A buyer is only interested in working with suppliers who have strong Environmental and Social Governance practices. It is therefore using ethical criteria as supplier selection stage to determine which suppliers to work with. Which of the following statements is true?
- A. compliance with Codes of Conduct from professional bodies is mandatory
- B. the buyer should ask suppliers to be accredited to ISO9001
a supplier who follows the CIPS Code of Conduct is more likely to meet the buyer's needs - C. ethical behaviour is impossible to determine as issues such as Modern Slavery often go undetected
Answer: B
Explanation:
A supplier who follows the CIPS Code of Conduct is more likely to meet the buyer's needs is the correct answer.
The other options are wrong:
1) Compliance with Codes of Conduct from professional bodies is optional. E.g. CIPS - no organi-sation is forced to comply with CIPS.
2) Unethical behaviour is not impossible to detect, it may be difficult but with correct due diligence and things like audits it's completely possible
3) ISO 14001 is quality management so is irelevent.
NEW QUESTION # 33
Which of the following financial ratios would indicate a supplier's potential exposure risk to a steeprise in inflation?
- A. gearing ratio
- B. acid test
- C. gross profit margin
- D. current ratio
Answer: A
Explanation:
The correct answer is 'gearing ratio'.
Gearing measures how much of a company's funding is based on long-term debt or loans- this would be affected by a steep rise in inflation. If a company has a mortgage on their offices or facto-ry and they need to remortgage and inflation has gone up a lot- they'll be paying a lot more on their mortgage. This will severely effect the gearing ratio as they'll have more outgoings than incoming.
Gross profit margin COULD be affected by inflation, for example if you've got hyper-inflation and the country goes into recession and people stop buying your product. However, this answer isn't al-ways right and depends on many factors- the industry, the product, the company etc, so for the purpose of CIPS should be discounted. There are many industries which are immune to inflation.
NEW QUESTION # 34
Daniel is evaluating bids from new suppliers who are looking to supply his company XYZ Indus-tries with components for manufacturing. Although price is important, Daniel wishes to consider 'added value'. Which of the following is considered an 'added-value solution'? Select THREE
- A. on time in full deliveries
- B. cost plus pricing
- C. bulk discount
- D. sustainability
- E. innovation
Answer: A,D,E
Explanation:
The correct answers are innovation, on time in full deliveries and sustainability.
The other options are pricing mechanisms rather than 'added value'. Added Value is giving the buyer something extra that's not necessarily financial. It can be as simple as delivering orders quicker than expected, or having a dedicated customer service phone line. Something that makes their lives a little easier.
NEW QUESTION # 35
Sourcing products internationally involves extra considerations when looking at the price of the item. Which of the following are additional price considerations for international sourcing? Select TWO
- A. batch quantities
- B. total life cycle costs
- C. tariffs
- D. exchange rate
- E. tax
Answer: C,D
Explanation:
Exchange rates and tariffs are associated with international sourcing.
The other options are concerns for both local sourcing and international sourcing.
NEW QUESTION # 36
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