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  1. Home
  2. CIPS Certification
  3. L4M4 Exam
  4. CIPS.L4M4.v2025-07-28.q80 Dumps
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Question 41

If a commodity index shows that the price of a commodity is continually rising, what does this indicate about the market?

Correct Answer: B
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.
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Question 42

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.

Correct Answer: A,B
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.
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Question 43

Intra-company trading allows business units within a large enterprise to supply goods or services to another.
What are the likely objectives of intra-company trading?
* Enhances production capacity utilisation
* Offsets some of the fixed costs of the supplying entity
* Compensates the supplying unit for the less effective technology applied
* Ensures internal technology always out-performs that of external suppliers

Correct Answer: A
Intra-company trading aims to optimize internal resources by enhancing production capacity utilization and offsetting fixed costs. By supplying goods or services internally, organizations can achieve economies of scale and better allocate resources. However, compensating for less effective technology or ensuring superior internal technology over external suppliers are not primary objectives of intra-company trading.
Reference:
CIPS Level 4 Diploma in Procurement and Supply, L4M4 Study Guide, Section 1.1.2: Make or buy decisions and the role of intra-company trading
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Question 44

Dylan is looking to appoint a new supplier of paint to his manufacturing business. The paint will be used to paint buses and taxis and therefore needs to be high quality and durable. Which of the following should Dylan look for in terms of quality management when appraising the suppliers?

Correct Answer: A
ISO9001 is Quality Management so is therefore the correct answer. The other options can be used to appraise suppliers but do not link directly or fully to Quality Management.
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Question 45

When assessing social responsibility elements of a supplier's proposal, what type of supporting evidence could a supplier provide?

Correct Answer: A
Compliance with fair trade standards demonstrates the supplier's commitment to social responsibility, including fair wages and ethical working conditions. This aligns with responsible sourcing practices, ensuring that suppliers maintain ethical labor standards, as advocated in the principles of ethical sourcing.
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