Pass Exam Questions Efficiently With L4M4 Questions (2026)
L4M4 Questions - Truly Beneficial For Your CIPS Exam
NEW QUESTION # 39
Ramesh is a procurement manager who is looking at his supplier base. He is pursuing a sourcing strategy with the aim of enabling logistical cost reductions. He has made the decision to scale-down his supplier base and purchase from one supplier.
Which type of sourcing arrangement has Ramesh began?
- A. dual
- B. multiple
- C. single
- D. sole
Answer: C
NEW QUESTION # 40
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. cleaning
- B. facilities management
- C. cereal bars and biscuits
- D. cakes
Answer: A,B
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 # 41
The procurement manager has received the following data from the supplier's accounts to facilitate the calculation of the supplier's current ratio:
Current Assets: Stock $200; Debtors $60; Cash $40; Total $300
Short Term Liabilities: Bank overdraft $150
Which calculation will the procurement manager use to find out the current ratio?
- A. 300÷150300 ÷ 150300÷150
- B. (300#150)×100(300 - 150) × 100(300#150)×100
- C. 300÷200×150300 ÷ 200 × 150300÷200×150
- D. (300#200#150)×100(300 - 200 - 150) × 100(300#200#150)×100
Answer: A
Explanation:
The current ratio is calculated by dividing total current assets by total current liabilities. Here, dividing $300 by $150 gives a current ratio of 2.0, indicating that the supplier has adequate current assets to cover its short- term obligations, an important factor in supplier evaluation.
NEW QUESTION # 42
Roberto is running a tender in which his main concern is price. However he is keen to hear also about the companies' Corporate Social Responsibility Policies and how this will impact their delivery. Roberto is considering awarding the CSRquestion4 points in a weighted point system. If he does this, what weight should be given to the price?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: C
Explanation:
96 is the correct answer- weighted point systems should add up to 100 (as in 100%)
NEW QUESTION # 43
Damian is a procurement professional in the Public Sector. He has recently run a competition to source new uniforms for hospital staff and has decided on a suitable supplier. Should Damian con-duct post tender negotiation with the supplier?
- A. no- it would be against the law for Damian to do this
- B. no- this isn't necessary as Damian has selected the most appropriate supplier
- C. yes- all tender processes should include post-tender negotiation
- D. yes- post-tender negotiation may result in a lower price and thus better value for money
Answer: A
Explanation:
Damian works in the Public Sector- it is against the law for the public sector to conduct 'post tender negotiation' after a contract has been awarded. This is because it's not transparent and equal opportunities, which are founding principles of public sector procurement.
Private sector can do whatever they want. They can do post-tender negotiations.
NOTE: this is currently the rules as per Public Contract Regulations 2015. These are being superseded in October by new legislation. The study guide doesn't mention this, but it's happening. At the time of writing (January 2023) we don't have the full details about what the new rules are but I doubt they will change on this particular topic. You can find out more about the changes to Public Sector Procurement here: Transforming Public Procurement - GOV.UK (www.gov.uk)
NEW QUESTION # 44
Which of the following would you expect to find in an Invitation to Tender? Select THREE
- A. risk assessments
- B. deadline(Correct)
- C. qualifications required
- D. pricing schedule
- E. awarding body
Answer: C,E
Explanation:
An ITT would include details on the awarding body (usually a brief overview of the buyer), the deadline (bids must be received by a certain date) and qualifications required (such as ISO requirements or competency certificates of staff members if it's a service contract). You wouldn't find pricing schedules in an ITT (this would be provided by the supplier in response to the ITT), nor would you find risk assessments (a supplier might be asked to provide one as part of the quality assessment of the tender though).
Invitation To Tender Simply Explained I Thornton & Lowe (thorntonandlowe.com)
NEW QUESTION # 45
A 'carnet' provides evidence of the origin of goods shipped in an international trade transaction. Is this statement correct?
- A. No, it is a document that allows the temporary free movement of goods
- B. No, it is a type of insurance cover to protect against loss of goods in transit
- C. Yes, it is only used when exporting goods from Europe and confirms the country of origin
- D. It is a widely used import document that confirms the origin of goods
Answer: A
Explanation:
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.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - international sourcing documentation.
NEW QUESTION # 46
Faisal is a medical equipment maintenance services procurement specialist within a local hospital. Faisal is responsible for ensuring contracts are in place that will ensure operational continuity of high-value pieces such as radiology equipment. When carrying out tender opportunities for these services, Faisal will specify, as an essential requirement, that certain standards are adhered to. Which of the following is a benefit of incorporating standards as a requirement within a specification?
- A. Standards will ensure suppliers meet all the buyer's requirements
- B. Standards provide clear guidelines and remove the risk of ambiguity
- C. Standards will ensure low pricing is submitted in the tender response
- D. Standards will mirror the buyer's requirements in its entirety
Answer: B
Explanation:
Incorporating standards within specifications provides clear guidelines for suppliers, reducing ambiguity and helping ensure consistency in quality and performance. This aligns with ethical and responsible sourcing practices by promoting transparency and setting consistent expectations for suppliers.
NEW QUESTION # 47
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. yes - these can be completed without warning which would give Ali an accurate picture of the supplier's operations
- 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. No- audits will only reveal financial issues not ethical ones
Answer: A
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 # 48
A buyer has been tasked with placing an order for steel from another country and using Incoterms for the delivery. The buyer's organisation has an in-house transportation and export clearance department. During negotiations, the buyer achieved a 25% cost reduction by accepting responsibility to arrange loading, transportation, and export clearance. Which Incoterm has been agreed?
- A. CIP - Carriage and Insurance Paid
- B. EXW - Ex Works
- C. FCA - Free Carrier
- D. FOB - Free on Board
Answer: B
Explanation:
Under the EXW (Ex Works) Incoterm, the buyer assumes responsibility for transportation and export clearance from the seller's premises. This term aligns with cost-saving measures and the buyer's internal capabilities for logistics, supporting efficient and responsible sourcing.
NEW QUESTION # 49
A buyer might opt to do an Invitation to Tender (ITT) rather than a Request for Quotation (RFQ) because ...
- A. The contract will be low value and there are many suppliers, therefore a simpler approach is required
- B. Time is of the essence and decisions need to be made quickly without additional stakeholder involvement
- C. The nature of the goods or services being purchased is complex and high value
- D. The supplier market is an oligopoly where a few large suppliers dominate the market
Answer: C
Explanation:
ITT is appropriate for complex/high-value procurements needing detailed submissions and robust evaluation.
RFQ suits simple, well-specified, lower-value buys where price comparison is primary.
Reference: CIPS L4M4 Study Guide (v2): LO "Implementation" - sourcing procedures (RFI/RFQ/ITT) matched to complexity and risk.
NEW QUESTION # 50
Which of the following can be undertaken by the buyer in relation to the governance of a supplier's ethical and sustainable behaviours?
* Review the insurance clauses in the contract
* Check that the supplier's internal policies are up to date
* Check the supplier's conflict of interest register for their contract
* Review the non-disclosure agreement for their contract
- A. 1 and 4 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 2 and 4 only
Answer: B
Explanation:
Regularly checking supplier policies and conflict of interest registers helps ensure that suppliers are upholding ethical standards, which supports responsible sourcing practices. This governance activity aligns with ethical guidelines to promote transparency and prevent conflicts that could affect the integrity of the supply chain.
NEW QUESTION # 51
A buyer is carrying out an assessment to identify the risk of unethical suppliers being selected for a new contract. Which of the following should the assessment include in order to protect the organisation against ethical reputational risks?
- A. The average staff retention levels experienced by the suppliers
- B. The likelihood of suppliers becoming insolvent in the future due to unforeseen circumstances
- C. Performance records (late deliveries/poor quality) of agreed contract deliverables
- D. Whether the suppliers have received negative press around their fair treatment of subcontracted staff
Answer: D
Explanation:
Assessing the ethical reputation of suppliers is crucial to mitigate risks associated with unethical practices.
Negative media coverage regarding the fair treatment of subcontracted staff is a significant indicator of potential ethical issues within a supplier's operations. Such information can highlight concerns related to labor rights violations, discrimination, or unsafe working conditions, which can adversely affect the buying organization's reputation if not addressed.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 3.3.1: Application of the CIPS Code of Conduct
NEW QUESTION # 52
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. Earnings per share
- B. Liquidity ratio
- C. Profitability ratio
- D. Dividend per share
Answer: B
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 # 53
A buyer is procuring metals. The following trends are observed:
* January and April: supplier's local currency is strong
* November: demand is lowest
* May: demand is highest
Which month should the buyer place the order?
- A. April
- B. January
- C. November
- D. May
Answer: C
Explanation:
Demand and currency fluctuations affect commodity pricing. November shows lowest demand, which usually reduces price pressure. Conversely, May (high demand) and months with strong supplier currencies (January, April) would increase costs. By ordering in November, the buyer leverages demand cycles to obtain lower prices. Responsible sourcing requires buyers to monitor market intelligence and seasonal trends to time purchases effectively, mitigating risks of price volatility while ensuring supply continuity. This reflects CIPS' s emphasis on category management and proactive procurement planning.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - demand cycles, timing of orders, commodity sourcing.
NEW QUESTION # 54
Liquidity is a solvency measure which determines whether an organisation is able to pay its debt. Which of the following would you use to assess a supplier's liquidity? Select TWO.
- A. long-term debt
- B. current assets
- C. current liabilities
- D. shareholder's equity
Answer: B,C
Explanation:
The correct answer is current assets and current liabilities. There are manyQuestionsabout financial ratios 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 it's a great way to explain liquidity) Liquidity ratios (youtube.com) You can be asked to work out liquidity in the exam. If you are asked this, the numbers will be very simple to the point you may be able to do the sums in your head. There is also a calculator on the test app you can use.
NEW QUESTION # 55
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. Earnings per share
- B. Liquidity ratio
- C. Profitability ratio
- D. Dividend per share
Answer: B
Explanation:
Liquidity ratios, such as the current and quick ratios, evaluate a company's ability to meet short-term liabilities with current assets. This metric is crucial for assessing a supplier's financial stability, ensuring continuity and reliability in the supply chain, which aligns with ethical and responsible sourcing principles.
NEW QUESTION # 56
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CIPS L4M4 Exam Syllabus Topics:
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