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CIPS L4M4 Exam
Ethical and Responsible Sourcing (Page 10 )

Updated On: 1-Feb-2026
Page 5 of 25
PDF with 180 Questions

During the quality assurance of a supplier, Margaret is looking for an international standard that shows the supplier's commitment to sustainable procurement.
What document should the supplier provide to show this?

  1. ISO20400
  2. ISO14000
  3. ISO9001
  4. ISO27000

Answer(s): A

Explanation:

ISO 20400 is sustainable procurement.
14000 is environment
9001 is quality management
27001 is information security



In order to assess whether a company is able to meet its current liabilities, which financial ratio should you use?

  1. Return on Equity
  2. Acid Test
  3. Gearing Ratio
  4. Gross Profit Margin

Answer(s): A

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.



Which of the following would you use to work out a company's gearing ratio? Select TWO.
0current liabilities

  1. net profit
  2. shareholder equity
  3. long term debt
  4. gross sales

Answer(s): A,C

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)



When working closely with a supplier, waste can be reduced which can lead to improved business functions and cost savings.
Which of the following are wastes that can be removed from the supply chain? Select THREE.

  1. Over-analyzing
  2. Barriers
  3. Motion
  4. Waiting
  5. Inventory

Answer(s): A,D,E

Explanation:

The correct answers are; motion, waiting and inventory. This is part of Ohno's 8 Wastes. You can remember this with the acronym Tim Woods; transportation, inventory, motion, waiting, over-production, over-processing, defects, skills. This is only mentioned briefly in this module but comes up in other modules more in depth, so is worth memorising if you can.



Elaine works for a British manufacturer of confectionary (sweets/ candy) items. One of the key ingredients is cocoa powder, which cannot be grown in the UK. Elaine therefore needs to look abroad for suppliers.
Which of the following are risks that Elaine needs to consider when sourcing internationally? Select THREE

  1. currency exchange fluctuations
  2. shortened lead times
  3. ethical behavior
  4. export tariffs
  5. cultural differences

Answer(s): A,C,E

Explanation:

The correct answers are; currency exchange fluctuations, ethical behavior and cultural differences.

Shortened lead times is not correct because sourcing internationally would result in longer lead times. Export tariffs is not correct as Elaine is importing the items into the UK, not exporting them.



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