L4M4 Exam Dumps - CIPS Level 4 Diploma in Procurement and Supply Questions and Answers

Response times should be tailored to the complexity of the tender. Responsible sourcing encourages flexibility in setting realistic timelines that allow suppliers adequate time to prepare, supporting efficient and effective sourcing without unnecessary delays.

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.

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. It is calculated by dividing current assets by current liabilities. In this case:

Current Assets = $300

Current Liabilities = $150

Current Ratio = 300 ÷ 150 = 2.0

This indicates that the supplier has twice as many current assets as current liabilities, suggesting good short-term financial health.

The gross profit margin ratio is calculated by subtracting the cost of goods sold (COGS) from income from sales, then dividing by income from sales. This ratio indicates the profitability of a supplier, a critical factor in assessing financial health, which helps buyers ensure reliable supply continuity.

Responsible procurement and supply are governed by several key regulatory areas to ensure ethical and fair practices. These include:

Ethical Practice:Ensures that organisations conduct business in a manner that is ethical and free from corruption.

Data Protection:Involves safeguarding personal and sensitive information, ensuring compliance with laws such as the General Data Protection Regulation (GDPR).

Marketplace Competition:Ensures fair competition among businesses, preventing monopolies and promoting consumer choice.

These areas are critical in maintaining integrity, trust, and compliance within procurement activities.

Exact Extract from Study Guide:

"Key areas of regulation that organisations must follow include data protection, ethical practice, health, safety and environment, worker rights, marketplace competition, and product safety standards."

Explanation

Greg needs to use a gearing ratio. Gearing is a measure of how the business is being funded and is based on the ratio of debt to equity Gearing comes up a lot in the exam. Also make sure you know what Return on Investment, Acid Test and EBITDA are.

Return on Investment (ROI): How to Calculate It and What It Means (investopedia.com)

EBITDA: Definition, Calculation Formulas, History, and Criticisms (investopedia.com)

Acid-Test Ratio: Definition, Formula, and Example (investopedia.com)

A carnet (specifically an ATA Carnet) is a customs document that allows for the temporary duty-free and tax-free movement of goods across international borders. It is commonly used for exhibitions, fairs, and professional equipment but is not proof of origin. Proof of origin is instead provided by a certificate of origin or other trade documents. It is also not an insurance policy. Responsible sourcing requires buyers to distinguish between documents used for temporary movement (carnet), origin evidence (certificate of origin), and risk transfer (insurance). Correct understanding avoids compliance failures, delays, or unexpected costs in international trade.

Explanation

The Pareto Principle can be used when considering changing a supplier. It helps to categories suppliers by how strategically important the item is that they provide to the business.

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.

Explanation

Completing Due Diligence checks will help guard against concerns about unethical business practices.

Not all companies will have a published Anti-Slavery policy- this is only required for large companies.

Known suppliers might have issues that you don't know about so you should always do due-diligence checks on everyone you work with

Formal tenders won't sort out ethical issues unless specifically addressed within the tender and strong contract management is put in place afterwards.