Pass Authentic CIPS L4M4 with Free Practice Tests and Exam Dumps
New L4M4 Exam Questions Real CIPS Dumps
CIPS L4M4 Exam Syllabus Topics:
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NEW QUESTION # 57
The International Chamber of Commerce (ICC) publish a list of commercial rules known as Inco-terms. What is the purpose of these rules?
- A. to state which products can be exported from which countries
- B. to provide internationally recognized product descriptions
- C. to describe the point at which an item is considered delivered
- D. to ensure buyers and suppliers pay the correct level of tax on imported and exported goods
Answer: C
Explanation:
Incoterms describe the point at which an item is considered 'delivered' and explains who has the risk of what during the transport of the goods.
NEW QUESTION # 58
Commodities are items which can be traded on the stock exchange. These are generally divided into four categories. What are these four categories?
- A. chemicals, agriculture, metals and livestock
- B. energy, agriculture, metals, livestock
- C. fruit, vegetables, meat and dairy
- D. metals, energy, elements and agriculture
Answer: B
Explanation:
energy, agriculture, metals, livestock are the four trading categories on the stock exchange. Some-times there's a 5th category added which is 'environmental credits'. This is a fairly new thing and you don't need to know anything about this for this exam.
Question no commodities will mainly centre around characteristics of commodities and factors that affect pricing.
Commodities are discussed much more in detail in L5M4. At level 4 you just need a basic overview.
NEW QUESTION # 59
If a company is described as 'liquid' what does this mean?
- A. the company has enough money to pay short-term liabilities
- B. the company is highly profitable
- C. the company is funded on equity rather than debt
- D. the company spends a lot of money
Answer: A
Explanation:
liquid = the ability to pay short and medium term debts. In simple terms do you have more in stuff (money, assets) than you owe in debt?
Understanding Liquidity and How to Measure It (investopedia.com)
This is a hot topic for the exam. Learn everything in this section.
NEW QUESTION # 60
Which of the following incoterms relate specifically to transporting items over water?
- A. ex works
- B. cost and freight
- C. delivered duty paid
- D. delivered at place
Answer: B
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 # 61
Tendering is a more formal and regimented process than sending out requests for quotations. Which of the following are services that are often put out to tender? Select THREE.
- A. cleaning
- B. office supplies
- C. consultancy
- D. security
- E. provision of raw materials
Answer: A,C,E
Explanation:
security, consultancy and cleaning are services which are often tendered as they tend to be high value and complex opportunities.
Office supplies and raw materials have less variables so you could use a RFQ for these instead.
A hint for this is also the word services. Security, consultancy and cleaning are services. Raw Materials and Office Supplies are goods.
NEW QUESTION # 62
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. tactical
- B. outsourcing
- C. insourcing
- D. strategic
Answer: A
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 # 63
A supplier operates in a monopolistic market where the threat of entry is low. The product that they offer is key in manufacturing certain types of submarines and there is no known substitute for the product at present.
What type of sourcing relationship is a buyer likely to have with this supplier?
- A. multiple sourced
- B. single sourced
- C. dual sourced
- D. sole sourced
Answer: D
NEW QUESTION # 64
Greg is doing some research on a potential supplier and is concerned that the supplier's funding is based on long-term debts and loans. Working with this supplier therefore might bring additional risks to Greg's business. What should Greg do about his concerns?
- A. work out the supplier's EBITDA
- B. use the Return on Investment Ratio
- C. do an Acid Test
- D. work out the supplier's gearing ratio
Answer: D
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)
NEW QUESTION # 65
What would an EBITDA ratio show you?
- A. how profitable a business is
- B. how effectively a business uses its assets to generate sales
- C. how much of a business's funding is made up of long term debt
- D. how solvent a business is
Answer: A
Explanation:
EBITDA stands for 'earnings before interest, tax, depreciation and amortization'. This is a profitability ratio and would show how profitable a business is.
EBITDA: Definition, Calculation Formulas, History, and Criticisms (investopedia.com)
NEW QUESTION # 66
Which of the following would you use to work out a company's gearing ratio? Select TWO.
0current liabilities
- A. net profit
- B. long term debt
- C. shareholder equity
- D. gross sales
Answer: A,B
Explanation:
Gearing measures how much of an organisation's long-term funding is made up of long term debt and loans.
Therefore the correct answers are 'shareholder equity' and 'long term debt'.
There are many question about financial ratios that can come up 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 they're really good at explaining things to beginners) Gearing Ratio explained (youtube.com)
NEW QUESTION # 67
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. the monatary value of the goods manufactured in a financial period
- D. average changes in price over a year
Answer: C
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 # 68
An organisation is keep to include Social Outcomes in it's assessment for Value for Money for a new tender.
Which of the following should be considered?
- A. CO2 emissions of the supplier's delivery vehicles
- B. supplier's ESG policy
- C. use of local labour to deliver the contract
- D. accreditations such as Fair Trade
Answer: C
Explanation:
Social value is about benefitting the local community / society. Therefore of those options listed, use of local labour is the most appropriate to consider.
NEW QUESTION # 69
A balance sheet will show a company's assets, liabilities and shareholder equity. What is share-holder equity?
- A. the amount of money held in the company's bank account
- B. the profit from sales once tax has been deducted
- C. the amount of money from retained earnings
- D. the owners' residual claim once all debt has been paid
Answer: D
Explanation:
shareholder equity = the owner/s of the organisation's residual claim once all debts have been paid. What Is Shareholder Equity (SE) and How Is It Calculated? (investopedia.com)
NEW QUESTION # 70
In which type of market would you be most likely to find a 'perfect competition'?
- A. monopoly
- B. commodity
- 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 # 71
Steff is a procurement manager at Giant Buttons Ltd who are considering offshoring a small section of their manufacturing operations. Which of the following is a risk of offshoring that Steff should consider.
- A. payments by electronic bank transfer
- B. lower operating costs
- C. importation rules and tariffs
- D. exportation rules and tariffs
Answer: C
Explanation:
The correct answer is importation rules and tariffs. This is because in offshoring some of the manufacturing will be done in another country then shipped back to the UK. The products will have to go through customs so may be subject to tariffs and duties.
Steff's not exporting anything in the scenario and paying electronically and getting lower costs are not RISKS.
NEW QUESTION # 72
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