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

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.

The balance sheet provides a snapshot of a company's financial position at a specific point in time, detailing assets, liabilities, and equity. Short-term liabilities, such as unpaid taxes and bank overdrafts, are obligations the company must settle within a year and are critical indicators of the company's liquidity and financial health.

Exact Extract from Study Guide:

"The balance sheet includes details of current liabilities, such as unpaid taxes and bank overdrafts, which are essential for assessing a supplier's short-term financial obligations and overall stability."

Porter's Five Forces and the STEEPLED model are valuable tools for analyzing supply markets. These models help identify external pressures and market dynamics, supporting responsible sourcing by enabling buyers to understand and respond to market influences effectively.

International trade relies on proper documentation. A certificate of origin (2) confirms where goods are produced, often required for customs clearance and to determine tariffs. A purchase order (3) provides formal buyer intent and agreement of terms, forming the basis for customs and logistics processes. Product quality statistics (1) and supplier financial position (4) are relevant for supplier selection and monitoring but not directly for import/export processes. Responsible sourcing requires procurement professionals to ensure correct documentation is used to avoid delays, penalties, or breaches of trade regulations.

Explanation

According to p.75 "a RFQ attempts to assess which supplier can achieve the Five Rights of Procurement". Although price is the only factor considered when using a RFQ- it's important to consider this price in detail; can the supplier deliver the right QUALITY of product for this price?, can they deliver the item WHEN we need it for this price? etc.

The answer is not 'who will deliver it the cheapest' because Jamilla might not pick the cheapest sup-plier. If the cheapest supplier has inferior quality paper, or can only make deliveries every other Tuesday then Jamilla may not select them.

Explanation

cash in advance is the most beneficial to a supplier.

Open account /credit account is the most beneficial to the buyer. Learn this as it's a known exam topic.

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.

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.

Explanation

New organisations or those with no loans/ credit cards may have low credit scores. This is simply because they do not have enough financial history to make their scores good. That means banks au-tomatically class them as higher risk, because they simply don't know that they're trustworthy yet.

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