Pass the CIPS CIPS Level 4 Diploma in Procurement and Supply L4M4 Questions and answers with CertsForce

Explanation

The correct answer is the CIPS Code of Conduct. This is a voluntary document about doing 'good procurement' i.e. treating suppliers with respect.

EU Procurement Directive is legislation, so isn't voluntary

ISO9001 is about quality management

ILO is an organisation rather than a document

A balance sheet sets out assets, liabilities and equity at a point in time. Current (short-term) liabilities such as overdrafts and tax creditors are part of it. Cash receipts (A) sit in cash-flow statements; expenses and profit (B) are in the income statement; ratios (C) are derived metrics, not items on the statement.

Explanation

"Meet current liabilities" is a posh way of saying "can you pay your bills". You're therefore looking for a liquidity ratio- a ratio that looks at assets vs liabilities (i.e. money in the bank vs money owed out). The Acid Test is a liquidity ratio. It's sometimes called the 'quick ratio'. Both terms come up on the exam. The other options are financial ratios but aren't for liquidity.

In a restricted tender process, only pre-qualified suppliers are invited to bid, ensuring that participating suppliers have met necessary qualifications. This approach helps in managing high-value contracts by focusing on capable suppliers. Ethical and responsible sourcing in the public sector demands supplier pre-qualification to ensure compliance, transparency, and quality.

The current ratio = Current Assets ÷ Current Liabilities. Here, Current Assets = 300; Current Liabilities = 150. Therefore, Current Ratio = 300 ÷ 150 = 2.0. This means the supplier has twice the assets available to cover short-term debts, indicating strong liquidity. The other options incorrectly subtract assets or liabilities, which is not the formula. Responsible sourcing emphasises interpreting ratios accurately: a ratio below 1 signals liquidity risks, while excessively high ratios may indicate inefficient asset utilisation.

In the initial evaluation of non-domestic vendor supply proposals, understanding and applying the correct Incoterm classifications is crucial. Incoterms (International Commercial Terms) define the responsibilities of buyers and sellers in international transactions, including the point at which risk transfers from seller to buyer. Evaluating these terms early ensures clarity in logistics, costs, and risk management.

Exact Extract from Study Guide:

"When sourcing from international suppliers, it is important to be aware of the key legislative and regulatory requirements in both the home country as well as the country of origin. Depending on product and service type, for example, you may need to consider product safety measures, industry regulations, and environmental regulations. In terms of organizational requirements, it is important to pay attention to details such as applicable payment terms and local labor practices."

The acid test (quick ratio) is an effective measure of a supplier's ability to meet short-term liabilities, providing insights into financial stability. This aligns with responsible sourcing by ensuring the supplier is financially capable of fulfilling a strategic contract.

Where price leverage is limited, buyers should seek value-adds: extended warranties, service levels, training, spares, delivery schedules, sustainability commitments, or risk-sharing. This aligns with total value and ethical outcomes beyond headline price.

Explanation

the correct answer is 'marketplace competition'.

Ethical practice is about prohibiting corrupt and unfair practice, rather than issues of supply and demand. Although being in a cartel is 'unethical behavior' this option doesn't fully answer the question which talks about limiting supply- this is related to marketplace competition.

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.