L4M4 Free Exam Questions and Answers PDF Updated on Mar-2026
Latest L4M4 Exam Dumps Recently Updated 278 Questions
NEW QUESTION # 139
A company has a low gearing of 20%. This shows that the company relies on equity capital and should therefore have less difficulty coping during tough economic times. Is this statement TRUE?
- A. No- a low gearing suggests that the company is financed by long-term debt rather than equity
- B. Yes- a low gearing ratio means the company's finances are made up of equity rather than debt
- C. Yes- a low gearing ratio shows that the business is solvent and can deal with supply chain disruptions easily
- D. No- a low gearing shows you that a company isn't likely to be profitable
Answer: B
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.
NEW QUESTION # 140
"Phishing" occurs when an employee receives a false email that appears genuine, exposing the organisation to cybercrime. Which crime category does this fall under?
- A. Human rights
- B. Corruption
- C. Bribery
- D. Fraud
Answer: D
Explanation:
Phishing is a form of fraud, where deception is used to gain financial advantage or access to sensitive data. It is not corruption (misuse of power), bribery (offering inducements), or a human rights issue. Procurement professionals must be alert to fraud risks in supply chains, including cyber-enabled risks such as phishing and invoice fraud. Responsible sourcing extends to protecting organisational data and finances against such attacks, often through robust controls, training, and supplier verification procedures.
Reference: CIPS L4M4 Study Guide (v2), LO: "Concepts" - fraud, corruption, and ethical risks in supply chains.
NEW QUESTION # 141
When using a 'credit account' payment mechanism, when does a supplier receive payment for the goods?
- A. before the order is placed
- B. when they receive the PO
- C. after delivery
- D. in advance of delivery
Answer: C
Explanation:
In a 'Credit Account' payment mechanism- the supplier receives payment after the goods are delivered, in line with agreed payment terms (which may be 30 days or something like that).
NEW QUESTION # 142
A public sector buyer ran a tender with eight bidders, all meeting minimum standards. How is the award decision made?
- A. The bidder's price
- B. Weighted criteria
- C. Supplier location
- D. Framework agreement terms
Answer: B
Explanation:
Public sector procurement is bound by transparency, fairness, and value-for-money principles. Once minimum thresholds are met, evaluation must be based on pre-published weighted criteria (often combining price, quality, sustainability, and social value). Sole reliance on price or location would breach fairness and equal treatment obligations. Weighted scoring ensures that decisions are objective, defendable, and aligned with responsible sourcing principles. This also allows ethical and sustainability considerations to be formally scored alongside commercial ones, reinforcing good governance.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implementation" - evaluation in public sector, weighted award criteria.
NEW QUESTION # 143
Other than price, what should a buyer consider when evaluating supplier quotations?
* Lead times
* Add-on costs
* Wastage rates
* Past performance
- A. 3 and 4 only
- B. 1, 2 and 3 only
- C. 2, 3 and 4 only
- D. 1, 2 and 4 only
Answer: D
Explanation:
When evaluating quotations, responsible buyers must look beyond headline price. Lead times (1) affect operational continuity. Add-on costs (2) (e.g., packaging, delivery, handling) can significantly change total cost. Past performance (4) demonstrates reliability and quality, crucial for ethical and sustainable sourcing.
Wastage rates (3) may be relevant but are typically assessed in performance monitoring, not initial quotation evaluation. This holistic view aligns with the total cost of ownership (TCO) approach promoted by CIPS, ensuring procurement decisions account for both direct and indirect impacts.
Reference: CIPS L4M4 Study Guide (v2), LO: "Application" - quotation evaluation and TCO analysis.
NEW QUESTION # 144
During which stage of the procurement cycle would you remove suppliers that do not add value, or could pose a risk to the buying organisation?
- A. supplier selection
- B. develop strategy
- C. asset management
- D. contract award
Answer: A
Explanation:
At supplier selection stage, unsuitable suppliers should be removed (those that do not add value or pose a risk).
At develop strategy stage you're not even looking at suppliers yet- you're just deciding what you need. At contract award and asset management it's too late.
CIPS procurement cycle - Procurement Supply Cycle | CIPS
NEW QUESTION # 145
If a company is described as 'liquid' what does this mean?
- A. the company is highly profitable
- B. the company is funded on equity rather than debt
- C. the company has enough money to pay short-term liabilities
- D. the company spends a lot of money
Answer: C
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 # 146
Azram is a facilities category buyer within the UK police force and is managing an overseas sourcing project for police uniform and personal protective equipment. Azram is of the opinion that international sourcing will help deliver much-needed financial savings, which can be utilized in other areas of the UK police force.
Azram is aware that exchange rate fluctuations can create risk for his organisation. How can Azram remove this risk?
- A. Request to use the exchange rate applicable at the time of delivery
- B. Ask suppliers to quote in GBP Sterling
- C. Evaluate international supplier's financial accounts
- D. Carry out a competitive tender exercise
Answer: B
Explanation:
Requesting suppliers to quote in GBP Sterling removes exchange rate risk by fixing the cost in the buyer's local currency. This strategy aligns with responsible sourcing practices by providing cost stability and protecting the procurement budget from currency fluctuations.
NEW QUESTION # 147
During which stage of the procurement cycle would you remove suppliers that do not add value, or could pose a risk to the buying organisation?
- A. supplier selection
- B. develop strategy
- C. asset management
- D. contract award
Answer: A
Explanation:
At supplier selection stage, unsuitable suppliers should be removed (those that do not add value or pose a risk). At develop strategy stage you're not even looking at suppliers yet- you're just deciding what you need.
At contract award and asset management it's too late.
CIPS procurement cycle - Procurement Supply Cycle | CIPS
NEW QUESTION # 148
Which of the following is a UK legislation concerning product safety?
- A. Competition Act 1998
- B. Consumer Rights Act 2015
- C. GDPR 2018
- D. Enterprise Act 2002
Answer: B
Explanation:
The Consumer Rights Act 2015 is about product safety and making sure products sold on the market are fit for purpose. It gives buyers rights and protections. The Consumer Rights Act 2015 - Citizens Advice There's a long list of legislation on p.105. I wouldn't worry about memorizing them all but just have an idea of what legislation relates to what area. E.g. GDPR is about Data Protection and the Com-petitions Act is about Marketplace competition. Most of them are quite obvious from the name.
NEW QUESTION # 149
Rules regulating the type of goods and the volume that can be imported into a country or trade block are commonly known as what?
- A. duties
- B. laws
- C. tariffs
- D. profits
Answer: B
Explanation:
This is tariffs. Be careful not to confuse tariffs and duties;
tariffs = rules and duties = payments.
NEW QUESTION # 150
A business may be faced with the challenge of deciding whether to source some of its requirements from external suppliers or whether to make them internally. Which of the following factors is likely to justify the decision to make the requirements internally?
- A. External suppliers are likely to be overcharging
- B. The other suppliers are using older technology
- C. The availability of in-house competencies and capacity to carry out the production
- D. External sourcing involves cumbersome tendering procedures
Answer: C
Explanation:
Internal production is often justified when a company has the necessary competencies and capacity. This approach aligns with responsible sourcing by leveraging internal capabilities for better control over quality, cost, and compliance with ethical and environmental standards.
NEW QUESTION # 151
You have been asked to purchase 500 pens of a specific brand. You decided to use a weighted points system for assessment of proposals. Is this approach appropriate?
- A. Yes, a weighted points system is always the best way to evaluate suppliers' bids
- B. Yes, you should follow the same procurement process irrespective of the circumstances
- C. No, it is not necessary, as in this case, you are mainly concerned with price
- D. No, you should only use a weighted points system for high-spend procurement
Answer: C
Explanation:
For low-value, routine purchases where price is the primary consideration, employing a weighted points system may not be necessary. Such systems are more suitable for complex procurements where multiple factors, such as quality, delivery, and sustainability, need to be evaluated alongside price. In the case of purchasing standard items like pens, a straightforward price comparison is typically sufficient.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 2.3.2: The use of weighted points systems for assessment
NEW QUESTION # 152
If a commodity index shows that the price of a commodity is continually rising, what does this indicate about the market?
- A. there is a threat of substitution
- B. the marketplace is a monopoly
- C. demand is exceeding supply
- D. that there is little demand in the marketplace
Answer: C
Explanation:
The correct answer is 'demand is exceeding supply'- If everyone wants to buy something, the sup-pliers will likely increase the price.
If there was little demand or there were threats of substitutions, this would likely result in a price decrease.
NEW QUESTION # 153
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 3 only
- B. 2 and 4 only
- C. 1 and 4 only
- D. 2 and 5 only
Answer: A
Explanation:
Governance of ethical and sustainable behaviour focuses on ensuring suppliers have the right systems, policies, and transparency measures in place. Reviewing insurance clauses ensures suppliers are prepared to manage liability and risks responsibly. Checking conflict of interest registers promotes transparency and prevents corruption. By contrast, NDAs protect confidentiality but are not primarily ethical governance tools, and simply checking "up-to-date policies" without context may not guarantee compliance. CIPS highlights governance mechanisms such as audits, policy reviews, and conflict registers as integral to monitoring ethical performance and ensuring accountability.
Reference: CIPS L4M4 Study Guide (v2), LO: "Implementation" - governance measures, monitoring supplier ethics.
NEW QUESTION # 154
Which of the following incoterms has the lowest risk to the buyer?
- A. free on board
- B. exworks
- C. delivered duty paid
- D. carriage and insurance paid to
Answer: C
Explanation:
The lowest risk to the buyer is 'delivered duty paid'. This is because the supplier does all the work transporting the items to the buyer's premises. Incoterms_2020_chart | Intersped
NEW QUESTION # 155
In which instance would multiple sourcing be the most applicable approach?
- A. Sourcing for high-cost, strategically important components
- B. Sourcing a specialised, unique component where the supplier's knowledge is key
- C. Sourcing for components required at short notice
- D. Sourcing for the provision of a service, where close relationship management is required
Answer: C
Explanation:
Multiple sourcing is particularly advantageous for ensuring quick delivery and preventing stock-outs, as it provides the flexibility to source from multiple suppliers. This approach aligns with responsible sourcing by ensuring continuity and reducing risks in the supply chain.
NEW QUESTION # 156
Luke has sent out a Request for Information to test the waters of the supply market for a new product he is sourcing. He has received a high number of detailed documents back from suppliers. Which of the following is Luke now likely to know about the marketplace? Select THREE
- A. amount of product competition
- B. expected changes in the marketplace
- C. exact costs of the item he's procuring
- D. acceptable lead times
- E. samples of the product
Answer: A,B,D
Explanation:
The correct answers are; lead times, product competition and changes in the marketplace.
You wouldn't expect to receive samples or costings from a Request for Information - rather, these should be expected as part of the Tender Competition
NEW QUESTION # 157
The procurement team received an urgent request from the business to source quotations for pestcontrol services. The team decided to use a local newspaper to advertise the requirements. Was this an appropriate approach to use in the circumstances?
- A. Yes, so that the local pest control sector can decide between them who should bid
- B. Yes, they must seek as many bids as possible, even if it takes longer
- C. No, because they might receive too many irrelevant proposals which may delay the assessing process
- D. No, because international vendors must also be notified of the opportunity
Answer: C
Explanation:
Advertising in a local newspaper for a specialized requirement can lead to irrelevant bids, delaying the process. Efficient sourcing practices recommend targeted advertising to reach qualified suppliers, ensuring timely responses and reducing assessment time, especially for urgent needs.
NEW QUESTION # 158
For complex and high value tenders, which document is the most appropriate to send to those suppliers who have already been appraised and deemed suitable?
- A. RFT
- B. ITT
- C. RFQ
- D. PQQ
Answer: B
Explanation:
The correct answer is Invitation to Tender. This is sent out to suitable suppliers inviting them to bidfor the opportunity.
A PQQ - pre-qualification questions naire- is sent to suppliers to see if they are suitable. The question states these suppliers have already been deemed suitable, so they've already passed PQQ A RFQ - request for quotation- would be used when the only variable is price, so is not suitable for complex tenders.
RFT isn't a thing. I made the last one up.
NEW QUESTION # 159
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