Real L4M4 Exam PDF Test Engine Practice Test Questions
CIPS L4M4 Real 2025 Braindumps Mock Exam Dumps
NEW QUESTION # 60
Which of the following factors are typically considered when assessing a supplier's financial capacity?
- A. The supplier's profitability and asset levels
- B. The price quoted in the request for quotation
- C. The supplier's compliance with regulations for minimum wages
- D. The supplier's costing methods and markup percentage
Answer: A
Explanation:
Profitability and asset levels indicate a supplier's financial stability and ability to meet contract demands.
Responsible sourcing practices include assessing financial capacity to reduce risk in the supply chain and ensure long-term supplier viability.
NEW QUESTION # 61
Ramesh is an IT category manager within the UK's National Health Service and is responsible for the procurement of a new high-value network system, which will spread across multiple doctors' practices and community health centres. Ramesh has reviewed different tender approaches and concluded that the use of a restricted tender is the most appropriate. Which of the following statements is true for a restricted tender process?
- A. Suppliers responding to the tender are pre-qualified
- B. Direct negotiations occur prior to suppliers submitting their offer
- C. The contract will be awarded strictly on pricing criteria
- D. It is only relevant when there are few suppliers in the market
Answer: A
Explanation:
In a restricted tender process, only pre-qualified suppliers are invited to bid, ensuring that participating suppliers have met necessary qualifications. This approach helps in managing high-value contracts by focusing on capable suppliers. Ethical and responsible sourcing in the public sector demands supplier pre- qualification to ensure compliance, transparency, and quality.
NEW QUESTION # 62
In order to assess whether a company is able to meet its current liabilities, which financial ratio should you use?
- A. Return on Equity
- B. Acid Test
- C. Gross Profit Margin
- D. Gearing Ratio
Answer: A
Explanation:
"Meet current liabilities" is a posh way of saying "can you pay your bills". You're therefore looking for a liquidity ratio- a ratio that looks at assets vs liabilities (i.e. money in the bank vs money owed out). The Acid Test is a liquidity ratio. It's sometimes called the 'quick ratio'. Both terms come up on the exam. The other options are financial ratios but aren't for liquidity.
NEW QUESTION # 63
Which of the following incoterms relate specifically to transporting items over water?
- A. cost and freight
- B. ex works
- C. delivered duty paid
- D. delivered at place
Answer: A
Explanation:
cost and freight is specific to transport over water. The others relate to all types of transportation.
Incoterms_2020_chart | Intersped
Some students report a lot of questions on Incoterms in the exam, some say they only had 1. It real-ly is luck of the draw.
NEW QUESTION # 64
Ji Yuan is a procurement manager who is looking for a new supplier to complete reactive maintenance activities throughout his property portfolio. The reactive maintenance will include an array of plumbing tasks as well as fixing electrical items. Suppliers therefore need to be extremely skilled and knowledgeable about a variety of tasks. Ji Yuan has done some initial research and doesn't believe that there are many suppliers who can complete this type of contract. What type of tender should he use?
- A. negotiated
- B. open
- C. competitive dialogue
- D. restricted
Answer: B
Explanation:
Open tenders should be used when the buyer expects there to be little interest / fewer bids. The opportunity is advertised widely allowing any supplier that wishes to submit a bid the opportunity.
The other options limit the number of suppliers and Ji Yuan doesn't want to do that, because he risks getting no interest and no supplier.
P.23
NEW QUESTION # 65
Henry is importing cheese from South East Asia into the UK. He is doing some research on the costs and risks of this and has discovered that the product may be considered of 'non-preferential origin'. What implications would this mean for Henry?
- A. the goods are subject to tariff quotas
- B. the goods are banned in the UK
- C. he will require insurance
- D. there are no duty charges or limitations
Answer: A
Explanation:
Items of 'Non-Preferential Origin' are subject to tariff quotas and other customs commercial regulations.
'Preferential Origin' goods have no duties or tariffs.
The good news is CIPS have significantly simplified section 3.2 of the syllabus. The new study-guide is much lighter on names of documents and protocols for importing and quotas etc. The focus of this Learning Outcome has shifted more to Inco Terms so I would focus on that for revision, but do make sure you have a basic understanding of documents, law and jurisdiction.
NEW QUESTION # 66
In which type of market would you be most likely to find a 'perfect competition'?
- A. commodity
- B. monopoly
- C. oligopoly
- D. monopolistic competition
Answer: C
Explanation:
An oligopoly. Perfect competition is a situation in a marketplace where there is plenty of competition. A monopoly or monopolistic competition would have 'imperfect competition'
NEW QUESTION # 67
A procurement manager for a major retail group is using ratio analysis to assess the financial viability of suppliers who have tendered for a logistics services tender. The recommended supplier has a current ratio of
0.6. What are the potential consequences of awarding the contract to this supplier, given their current ratio is below 1?
- A. The supplier will be unable to pay its short-term liabilities using current assets
- B. The supplier will be unable to cover long-term liabilities from revenues
- C. The supplier will have cash reserves to cover unexpected expenses
- D. The results of the current ratio do not mean anything as long as the supplier has proven technical merit
Answer: A
Explanation:
A current ratio below 1 suggests that the supplier may not have sufficient current assets to cover short-term liabilities, which could pose a risk to the buyer. Assessing financial stability aligns with responsible sourcing practices, as it ensures suppliers can fulfill contracts without disruption.
NEW QUESTION # 68
Which of the following is an example of intracompany trading? Select TWO
- A. two companies join together to create a new product
- B. two departments within the same company collaborate on a project
- C. a manufacturer in the UK buys raw copper from a supplier in Chile
- D. two companies owned by the same entity conduct business
- E. cleverness
Answer: B,D
Explanation:
Intracompany trading is when two departments in the same company do trading. AND when two companies owned by the same parent company do trading.
INTRA means 'within' - so it's doing business with yourself.
NEW QUESTION # 69
Curly Cake Incorporated makes lots of different types of confectionary items. Although they are most famous for their cakes, they also have a smaller line of cereal bars and biscuits. Which of the following would be the most appropriate items for Curly Cake Incorporated to outsource? Select TWO
- A. cakes
- B. cereal bars and biscuits
- C. facilities management
- D. cleaning
Answer: C,D
Explanation:
Cleaning and Facilities Management are the most appropriate items to outsource. They would not outsource the making of confectionary products as this is the 'core' business.
See p.4 for "what is outsourcing?"
NEW QUESTION # 70
During which stage of the procurement cycle would you remove suppliers that do not add value, or could pose a risk to the buying organisation?
- A. develop strategy
- B. contract award
- C. supplier selection
- D. asset management
Answer: C
Explanation:
At supplier selection stage, unsuitable suppliers should be removed (those that do not add value or pose a risk). At develop strategy stage you're not even looking at suppliers yet- you're just deciding what you need.
At contract award and asset management it's too late.
CIPS procurement cycle - Procurement Supply Cycle | CIPS
NEW QUESTION # 71
A company has a requirement for an item that has been identified as strategic on the positioning model. The company needs to invite competitive tenders and ensure the selected supplier of this item is in a good financial position. What should the company ask the suppliers to send to show that their current assets cover their current liabilities?
- A. Annual turnover
- B. Gearing ratio
- C. Acid test
- D. Profit and loss account
Answer: C
Explanation:
The acid test (quick ratio) is an effective measure of a supplier's ability to meet short-term liabilities, providing insights into financial stability. This aligns with responsible sourcing by ensuring the supplier is financially capable of fulfilling a strategic contract.
NEW QUESTION # 72
The sourcing process is considered to include the initial stages of the generic procurement cycle, up to the stage where the contract is awarded to the successful bidder. The stages in the sourcing process may include ...
- A. Reminding the design manager to approve the drawings which will accompany the invitation to tender documents
- B. Comparing the supplier's delivery note with the purchase order to confirm the specification
- C. Processing the requisitions to facilitate call-offs against a newly created framework contract
- D. Engaging with suppliers to ensure that they are achieving the KPIs set in the contract
Answer: A
Explanation:
In the sourcing process, obtaining necessary approvals (such as drawings for the invitation to tender) is critical to ensure clarity and readiness before engaging with suppliers. Responsible sourcing emphasizes structured preparation, ensuring compliance and accuracy in supplier expectations.
NEW QUESTION # 73
Which of the following are reasons to outsource part of a business to an external supplier? Select TWO.
- A. overheads can be kept as effective as possible
- B. there are more resources in-house
- C. the product or service is core to the organisation
- D. the reduction in the need to continually invest in new machinery
Answer: A,D
Explanation:
Reasons to outsource include; 'overheads can be kept as effective as possible' and 'the reduction in the need to continually invest in new machinery'.
When you outsource, you transfer the costs of overheads to the supplier and it is their responsibility to buy new machinery as and when is required. For example if you outsource cleaning, the cleaning company is responsible for replacing the hoovers and floor cleaner The other two options would be reasons to keep something 'in-house'.
NEW QUESTION # 74
Which of the following financial ratios would indicate a supplier's potential exposure risk to a steeprise in inflation?
- A. gross profit margin
- B. current ratio
- C. gearing ratio
- D. acid test
Answer: C
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 # 75
Ali is the Category Manager at an airplane manufacturing factory. He works with many different suppliers who provide different components for the planes. The company is investing heavily in Environmental and Social Governance and Ali has been asked by the CEO what the best practice is to ensure ethical behaviour from suppliers. Ali has suggested completing Audits. Is this the right thing to do?
- A. No- audits will only reveal financial issues not ethical ones
- B. Yes- audits always uncover ethical violations such as modern day slavery
- C. No- Ali should simply ask the supplier's about their ethical practices
- D. yes - these can be completed without warning which would give Ali an accurate picture of the supplier's operations
Answer: D
Explanation:
The correct answer is 'yes - these can be completed without warning which would give Ali an accurate picture of the supplier's operations'. The other options are incorrect:
1) you can do many types of audit- financial, ethical, Health and Safety etc
2) asking a supplier about their ethical practices isn't likely going to get you accurate information. They'll just tell you what they think you want to hear
3) audits are great- but they don't ALWAYS uncover issues. Always is the key word in that sentence which makes it incorrect.
NEW QUESTION # 76
Which of the following items would you expect to find on a balance sheet? Select THREE
- A. gross product sales
- B. current liabilities
- C. current assets
- D. stockholders' equity
- E. net product sales
Answer: B,C,D
Explanation:
current assets, current liabilities and equity can be found on a balance sheet. Net and gross sales will be found on a profit and loss account.
NEW QUESTION # 77
Many organisations prefer a multi-sourcing approach because of the advantages it provides. Which of the following might be an advantage of multi-sourcing?
- A. It is the only approach that enables the buyer to isolate the best supplier from among many
- B. It helps the buyer to increase stock varieties to avoid stock-outs
- C. It increases process flexibility and switching using a range of approved suppliers
- D. It is the only approach that supports the open tendering process
Answer: C
Explanation:
Multi-sourcing allows organisations to diversify their supply base, providing flexibility, and reducing risk by having multiple suppliers. It is an effective strategy to prevent over-dependence on a single source and allows for competition among suppliers, promoting quality and ethical standards in the supply chain.
NEW QUESTION # 78
Bob works in the procurement department of a construction firm. He has been asked to procure an item for a short-term project which is considered low risk. What type of sourcing will he be completing?
- A. outsourcing
- B. strategic
- C. insourcing
- D. tactical
Answer: D
Explanation:
tactical is the correct answer; items that are short-term or low value are considered tactical.
Strategic sourcing is long term and high value.
Outsourcing is moving a key business function to an external company.
Insourcing is bringing a previously outsourced part of the company back in-house.
NEW QUESTION # 79
A buyer for a large manufacturing organisation is assessing a sole supplier tender opportunity. The buyer is finding it challenging to differentiate the proposals on unit purchase price. Are there any added values that the procurement manager can use to leverage the sole supplier proposal?
- A. No, the buyer must make the decision based on the existing information
- B. Yes, but only if the buyer decides to re-start the tender opportunity
- C. Yes, the buyer can negotiate on aspects such as after-sales service
- D. No, because a buyer has no leverage over a sole supplier
Answer: C
Explanation:
In cases where price differentiation is minimal, negotiating on added-value services like after-sales support can offer additional benefits. This aligns with responsible sourcing by focusing on long-term value and fostering a cooperative relationship with the supplier.
NEW QUESTION # 80
GDP is an economic index that a procurement professional can use to measure economic data. What does GDP tell you?
- A. the value of public limited companies within a country
- B. the value of commodities such as steel, oil and wheat at a point in time
- C. average changes in price over a year
- D. the monatary value of the goods manufactured in a financial period
Answer: D
Explanation:
GDP = gross domestic product = "the monetary value of goods and services manufactured or sup-plied in a financial period". People use it to say whether a country's economy is strong or weak.
Stock markets look at the value of public limited companies within a country.
Commodity indices look at the value of commodities such as steel, oil and wheat at a point in time Average changes in price over a year can be measured by CPI or PPI
NEW QUESTION # 81
Which of the following incoterms has the lowest risk to the buyer?
- A. free on board
- B. carriage and insurance paid to
- C. exworks
- D. delivered duty paid
Answer: D
Explanation:
The lowest risk to the buyer is 'delivered duty paid'. This is because the supplier does all the work transporting the items to the buyer's premises. Incoterms_2020_chart | Intersped
NEW QUESTION # 82
When evaluating a supplier's proposal in relation to ESC (Environmental, Social, Governance, and ethical elements), it is common to send questionnaires to suppliers requesting information, which can later be scored.
Which of the following questions would be assessing any of the ESC criteria?
* Could you provide details on your manufacturing and raw material costs as part of an open-book pricing contract?
* How do you promote equal opportunity for your employees, customers, and suppliers?
* What is the annual turnover and profitability of your company?
* Does your company have an anti-bribery policy?
- A. 1 and 4
- B. 2 and 4
- C. 1 and 3
- D. 2 and 3
Answer: B
Explanation:
Questions about equal opportunity and anti-bribery policies assess the supplier's commitment to social and ethical standards. These aspects are part of the ESC criteria, which align with responsible sourcing practices by ensuring suppliers maintain ethical workforce practices and governance.
NEW QUESTION # 83
Which of the following are primary sources of data? Select TWO.
- A. economic indices such as PPI or CPI
- B. market reasearch commissioned by a rival company
- C. published price lists
- D. phone calls with current suppliers
- E. trade fairs and exibits
Answer: D,E
Explanation:
Primary data includes trade fairs and exhibits, and phone calls to current suppliers. The others are examples of secondary data.
Remember primary= you do it yourself, Secondary = someone else did it.
NEW QUESTION # 84
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