L4M4 Dumps - Grab Out For [NEW-2026] CIPS Exam
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CIPS L4M4 Exam Syllabus Topics:
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NEW QUESTION # 93
Incoterms are designed to be understood and interpreted on a worldwide basis. What is the interpretation for FOB (Free on Board)?
- A. The buyer takes responsibility for taking the goods from the departure quayside to the ship, plus all subsequent costs
- B. The buyer takes responsibility for the goods after they are loaded on the ship, plus subsequent costs, excluding freight charges
- C. The buyer takes responsibility for the goods after they are loaded on the ship, plus all subsequent costs, including freight charges
- D. The buyer takes responsibility for transferring the goods from the seller's premises to the ship, plus all subsequent costs
Answer: C
Explanation:
Under FOB (Free on Board), the buyer assumes responsibility once the goods are loaded onto the ship, including costs and risks beyond this point. This Incoterm is commonly used in international trade, helping both parties clarify responsibilities and promote fair risk distribution.
NEW QUESTION # 94
One approach to managing supply risk is having multiple suppliers for a product. Which condition justifies multiple sourcing?
- A. It is suitable for high-value, one-off requirements such as machinery
- B. It restricts competition within the supplier base
- C. It increases risk and costs of switching suppliers
- D. It is suitable for high-value requirements such as raw materials
Answer: D
Explanation:
Multiple sourcing is most suitable for strategically important, high-value requirements such as raw materials.
This approach reduces dependency on a single supplier, improves resilience, and increases competition. One- off requirements like machinery (A) are not suited to multiple sourcing, while options B and D describe disadvantages, not benefits. Responsible sourcing requires risk mitigation strategies tailored to the category, and multiple sourcing is effective where continuity and bargaining power are critical.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - sourcing strategies and supply risk management.
NEW QUESTION # 95
Which of the following should be considered when calculating ratios relating to a supplier's liquidity?
- A. inventory
- B. receivables
- C. reserves
- D. profit
Answer: A
NEW QUESTION # 96
Which of the following items would you expect to find on a balance sheet? Select THREE
- A. current assets
- B. stockholders' equity
- C. net product sales
- D. current liabilities
- E. gross product sales
Answer: A,B,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 # 97
What type of ratio is used to measure a company's ability to meet its short-term financial obligations, specifically focusing on its ability to convert assets into cash to cover current liabilities?
- A. Dividend per share
- B. Profitability ratio
- C. Liquidity ratio
- D. Earnings per share
Answer: C
Explanation:
Liquidity ratios assess a company's capacity to meet its short-term obligations using its most liquid assets.
These ratios, such as the current ratio and quick ratio, provide insight into the financial health of a company by indicating whether it has sufficient resources to pay off its immediate liabilities without raising external capital.
Exact Extract from Study Guide:
"Liquidity ratios: # Typical ratios: current ratio, quick ratio, cash flow ratio, etc. # Formulae of those ratios # Implications of liquidity ratios
NEW QUESTION # 98
Private sector procurement organisations should always allow suppliers at least 35 days to respond to invitations to tender. Is this statement true?
- A. Yes, because it helps suppliers to plan and prioritise
- B. No, because this timeframe causes unacceptable delays
- C. Yes, because that timeframe is internationally recognised
- D. No, because the complexity of the tender should inform the response timescale
Answer: D
Explanation:
The 35-day minimum applies to public sector procurement under EU/UK directives, not the private sector. In private procurement, response times should be proportional to the complexity and value of the requirement.
Simple RFQs may require only a few days, while complex tenders involving technical submissions may justifiably need weeks. Responsible sourcing involves ensuring suppliers have fair opportunity to respond adequately, but without unnecessary delays that could affect business needs. Therefore, rigidly applying a fixed number of days in the private sector is neither necessary nor efficient.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - procurement timelines, public vs private sector differences.
NEW QUESTION # 99
What is the best way to demonstrate that your organisation does not tolerate bribery and corruption?
- A. Not working with suppliers who have a reputation for bribery
- B. Having full anti-bribery training, policies, and procedures in place
- C. Requesting suppliers' ethical policies annually
- D. Asking all suppliers to read your organisation's anti-bribery policy
Answer: B
Explanation:
The most effective way to demonstrate zero tolerance is by embedding a comprehensive anti-bribery framework: clear policies, mandatory staff and supplier training, reporting channels, and monitoring. Simply requesting suppliers' policies or avoiding known offenders is reactive, not proactive. Requiring suppliers to read policies without internal enforcement lacks substance. CIPS highlights that robust governance structures, supported by recognised frameworks such as the UK Bribery Act or FCPA, reinforce organisational credibility, protect reputation, and ensure compliance. This builds trust across supply chains and ensures ethical standards are maintained.
Reference: CIPS L4M4 Study Guide (v2), LO: "Concepts" - ethics, anti-bribery and corruption frameworks.
NEW QUESTION # 100
You have been asked to set some key performance indicators (KPIs) for your local stationery provider and you decide to set the following requirements:
To deliver all orders within a one-hour period
To collect any returns within one hour
Are these KPIs appropriate?
- A. Yes, because they are local so it should be easy for them if they want the business
- B. No, because you do not want to make demands and ruin future relations
- C. Yes, because the customer is always right so the supplier should do it
- D. No, because they are not realistic or achievable for a company to fulfil
Answer: D
Explanation:
KPIs must be realistic, measurable, and achievable to drive performance improvement without creating unfair or unworkable expectations. Requiring delivery and returns within one hour is unlikely to be practical, even for a local supplier, and could increase costs, operational strain, or service failure. Ethical and responsible sourcing promotes setting proportionate KPIs that support continuous improvement and sustainable supplier relationships. Unrealistic KPIs undermine collaboration, damage trust, and may result in non-compliance rather than improved performance.
Reference: CIPS L4M4 Ethical & Responsible Sourcing Study Guide (v2) - performance management; KPIs and supplier relationship management.
NEW QUESTION # 101
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 shows that the business is solvent and can deal with supply chain disruptions easily
- B. Yes- a low gearing ratio means the company's finances are made up of equity rather than debt
- C. No- a low gearing shows you that a company isn't likely to be profitable
- D. No- a low gearing suggests that the company is financed by long-term debt rather than equity
Answer: B
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 # 102
What course of action should be taken when an audit of a supplier identifies evidence of human rights malpractice?
- A. Immediately halt all orders and switch to an alternative source of supply
- B. Remove all business and inform press organisations to escalate to government authorities
- C. Immediately raise the issue with the supplier and jointly develop a timely action plan before a repeat audit
- D. Allow the supplier to complete current orders while pursuing alternatives
Answer: C
Explanation:
CIPS promotes a constructive and corrective approach when suppliers fall short of ethical standards, especially on critical issues like human rights. Immediately cutting ties can harm workers further and disrupt supply without addressing root causes. A responsible sourcing approach requires buyers to engage suppliers, escalate the concern, and establish a corrective action plan with monitoring to ensure compliance. Only if the supplier refuses to act or breaches persist should termination occur. This supports continuous improvement, supplier development, and ethical due diligence, reflecting global standards such as the UN Guiding Principles on Business and Human Rights.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implementation" - audits, corrective action plans, ethical risk management.
NEW QUESTION # 103
Which of the following incoterms relate specifically to transporting items over water?
- A. delivered at place
- B. ex works
- C. cost and freight
- D. delivered duty paid
Answer: C
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 # 104
A chief procurement officer (CPO) reviews a tender process and recommendation before making the final submission to the board of directors for approval. The CPO notices that the evaluation team assessed technical and financial capacity but did not conduct an assessment and due diligence on the supplier's environmental, social, governance, anti-bribery, and corruption practices and processes. The CPO has decided to forward the report to the board for approval and seek reassurance from the supplier at a later date once the contract has been signed. Was the CPO's decision the correct one?
- A. No, evaluation of suppliers' compliance is important to protect the buying organisation against reputational risk and other losses
- B. Yes, as compliance to environmental, social and governance will result in an unjustified increase in supplier costs
- C. Yes, because only financial and technical capacity matters in the evaluation of strategic contracts
- D. No, because a supplier's practices become confidential once a contract has been signed
Answer: A
Explanation:
Ethical and responsible sourcing requires that environmental, social, governance, anti-bribery and corruption (ESG/ABC) considerations are assessed before contract award, not after. Failure to conduct due diligence exposes the buying organisation to reputational damage, legal sanctions, financial losses, and supply chain disruption. Seeking reassurance post-contract removes leverage and weakens governance controls. CIPS guidance stresses that supplier evaluation must be holistic, covering technical, financial, and ethical compliance to ensure risks are identified and mitigated early. Strategic contracts, in particular, demand robust due diligence to protect organisational integrity and stakeholder trust.
Reference: CIPS L4M4 Ethical & Responsible Sourcing Study Guide (v2) - supplier due diligence; ESG and reputational risk management.
NEW QUESTION # 105
A business may be faced with the challenge of deciding whether to source some of its requirements from external suppliers or whether to make them internally. There are many factors that need to be considered before arriving at such a decision. Which of the following factors is likely to justify the decision to make the requirements internally?
- A. The availability of in-house competencies and capacity to carry out the production
- B. External sourcing involves cumbersome tendering procedures
- C. External suppliers are likely to be overcharging
- D. The other suppliers are using older technology
Answer: A
Explanation:
The decision to make a product internally rather than sourcing it externally is influenced by several factors.
One of the primary considerations is the availability of in-house competencies and capacity. If an organisation possesses the necessary skills, technology, and resources to produce the required goods or services efficiently, it may opt for internal production to maintain control over quality, reduce costs, and protect proprietary information.
Exact Extract from Study Guide:
"Make or buy decisions take into account: product/service is core, the organisation's capacity to make, current market (cost saving with economy of scales and/or logistics), amount of competition."
NEW QUESTION # 106
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 be used across multiple doctors'practices and community health centres. Ramesh has reviewed the different tender approaches and has 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. The contract will be awarded strictly on pricing criteria
- B. Suppliers responding to the tender are pre-qualified
- C. Direct negotiations occur prior to suppliers submitting their offer
- D. It is only relevant when there are few suppliers in the market
Answer: B
Explanation:
In a restricted tender process, suppliers are pre-qualified through a selection process before being invited to submit tenders. This approach is suitable when there is a need to ensure that only capable suppliers are considered, often due to the complexity or high value of the procurement. It is not limited to situations with few suppliers, and direct negotiations typically occur after tender submissions, not before. Contracts are awarded based on multiple criteria, not solely on price.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 2.2: Tendering Procedures
NEW QUESTION # 107
What type of ratio measures a company's ability to meet short-term obligations, focusing on converting assets to cash?
- A. Dividend per share
- B. Profitability ratio
- C. Liquidity ratio
- D. Earnings per share
Answer: C
Explanation:
Liquidity ratios (e.g., current ratio, quick ratio) measure whether a company can cover short-term debts with liquid assets like cash, receivables, and inventory. These ratios provide insight into a supplier's ability to remain operational without defaulting on immediate obligations. Profitability ratios show long-term returns; EPS and dividends per share apply to shareholders, not supply continuity. Responsible sourcing emphasises liquidity as a key measure of supplier stability, as poor liquidity can cause supply interruptions or business failure, jeopardising contracts and buyer obligations.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - financial appraisal, liquidity assessment.
NEW QUESTION # 108
Credit rating agencies can assist procurement professionals. Typically, which of the following can be obtained from a credit rating agency report? Select TWO that apply.
- A. Rebate information
- B. Product pricing information
- C. Payment history
- D. Financial stress score
- E. Tender submission pricing
Answer: C,D
Explanation:
Payment history and financial stress scores provide insights into a supplier's financial health and stability.
This information is crucial for procurement professionals in assessing whether a supplier can fulfill long-term commitments, supporting responsible sourcing by mitigating financial risks.
NEW QUESTION # 109
What are the two main financial accounting statements of an organisation that show the values of assets and liabilities, and the profit earned in the period?
- A. Cash flow statement (statement of cash flow) and balance sheet (statement of financial position)
- B. Balance sheet (statement of financial position) and profit and loss account (statement of financial performance)
- C. Cash flow statement (statement of cash flow) and profit and loss statement (statement of financial performance)
- D. Profit and loss account (statement of financial performance) and chairman's statement (in the annual report)
Answer: B
Explanation:
The balance sheet and profit and loss account provide a comprehensive view of an organisation's financial health, showing assets, liabilities, and profits. These statements are essential in evaluating a supplier's financial capacity, aligning with responsible sourcing practices for financial stability.
NEW QUESTION # 110
Why is it important to consider factors such as environmental, social, governance and ethics when analysing tender proposals from the market?
* To ensure adherence to sustainability initiatives
* To improve the process workflow
* To perform supplier spend and monitoring
* To identify potential risks within the supply chain
- A. 2 and 3 only
- B. 1 and 4 only
- C. 3 and 4 only
- D. 1 and 2 only
Answer: B
Explanation:
Incorporating Environmental, Social, and Governance (ESG) and ethical considerations into tender analysis is crucial for:
* Adherence to Sustainability Initiatives:Ensuring that suppliers align with the organisation's sustainability goals and legal obligations.
* Risk Identification:Assessing ESG factors helps in identifying potential risks in the supply chain, such as environmental violations or unethical labour practices, which can impact the organisation's reputation and operations.
Exact Extract from Study Guide:
"This unit focuses on responsible procurement practices, ensuring that sourcing decisions align with legal, environmental, and social governance (ESG) principles."
NEW QUESTION # 111
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 # 112
ABC Ltd works with supplier XYZ Ltd who uses a variety of subcontractors. ABC has recently learned of an ethical breach being committed by one of XYZ's subcontractors. What should ABC do?
- A. Terminate the contract
- B. Recommend remedial action
- C. Seek compensation
- D. Research alternative suppliers
Answer: B
Explanation:
ABC should do a 'root cause analysis' to find out where the issue has come about, and why. From there, once they know what the breach is and how serious it is, they can suggest corrective action.
They can't jump straight to terminating the contract or seeking damages as it's not the supplier itself but rather the subcontractor. Also that would be really hasty considering we don't know what the issue is and what the market conditions are like. That supplier may be the only one who can provide the product. We also don't know if the supplier knows about the issue themselves.
NEW QUESTION # 113
A 'carnet' provides evidence of the origin of goods shipped in an international trade transaction. Is this statement correct?
- A. It is only used when exporting goods from Europe and confirms the country of origin
- B. It is a widely used import document that confirms the origin of goods
- C. It is a document that allows the temporary free movement of goods
- D. It is a type of insurance cover to protect against loss of goods in transit
Answer: C
Explanation:
A carnet (ATA Carnet) is an international customs document that allows for the temporary, duty-free and tax- free movement of goods across borders, usually for exhibitions, trade fairs, or professional equipment. It is not proof of origin (which is confirmed by a certificate of origin), nor is it an insurance document. It is also not restricted to European exports. By reducing customs paperwork and costs for temporary movements, carnets support trade efficiency but do not replace origin or insurance documents. Responsible sourcing requires procurement professionals to know which trade documents are appropriate for compliance and risk management.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - international trade documentation.
NEW QUESTION # 114
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