When conducting a competitive tender, is it appropriate to use a supplier's credit rating as a criteria for pre-section?
Answer(s): B
The correct answer is 'yes- because a low credit rating would indicate the supplier is financially un- stable'.The two options beginning with no should automatically be discounted. The other option is incor-rect because credit ratings are private and would therefore not affect reputation.
Which of the following financial ratios would indicate a supplier's potential exposure risk to a steep rise in inflation?
Answer(s): D
The correct answer is 'gearing ratio'.Gearing measures how much of a company's funding is based on long-term debt or loans- this would be affected by a steep rise in inflation. If a company has a mortgage on their offices or facto-ry and they need to remortgage and inflation has gone up a lot- they'll be paying a lot more on their mortgage. This will severely effect the gearing ratio as they'll have more outgoings than incoming. Gross profit margin COULD be affected by inflation, for example if you've got hyper-inflation and the country goes into recession and people stop buying your product. However, this answer isn't al-ways right and depends on many factors- the industry, the product, the company etc, so for the purpose of CIPS should be discounted. There are many industries which are immune to inflation.
Guillerme is a Category Manager within the procurement department of a Manufacturing company. In his Category there are 200 items he procures, and he has recently undertaken an ABC analysis of these. Which of the following items would be C category items?
Answer(s): C
The C category is the 'tail spend' - it represents a large number of suppliers of small value items. I recommend giving this a read ABC Classification & ABC Method | CIPS
GDP is an economic index that a procurement professional can use to measure economic dat
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
FTSE100 and Sensex are examples of what?
Answer(s): A
they are stock markets.What is the FTSE 100 Index? Complete Beginner's Guide (moneycheck.com) BSE SENSEX Wikipedia
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