CIPS Exam L4M4 Topic 3 Question 29 Discussion

Actual exam question for CIPS's L4M4 exam

Question #: 29
Topic #: 3

[All L4M4 Questions]

Procurement professionals should never appoint any suppliers that have a low credit rating. Is this statement TRUE?

AYes, because this rating indicates poor financial management practices

BNo, because a credit rating is only one financial tool to be used in determining financial competence

CNo, because a credit rating is not an appropriate decision-making tool

DYes, because this rating means that insolvency or liquidation is imminent

Show Suggested Answer

Suggested Answer: C

The correct answer is 'no- quoting in the supplier's currency increases the risk for the buyer'. This questions comes up in a variety of formats in the exam. Remember; if the price is in your own currency (most examples in the exam are given in ) there is less risk than if the prices are quoted in a foreign currency. This is because exchange rates fluctuate; if the price is in you always know what you're paying, if it's in another currency the price can change daily depending on if the exchange rate compared to has gone up or down.

by Derrick at Jan 22, 2025, 01:18 AM

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Margret

4 months ago

If my credit score was as low as my bank balance, I'd be doomed too. Glad procurement has more sophisticated tools than my wallet!

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Zana

3 months ago

C) No, because a credit rating is not an appropriate decision-making tool

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Ulysses

3 months ago

B) No, because a credit rating is only one financial tool to be used in determining financial competence

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Therese

3 months ago

A) Yes, because this rating indicates poor financial management practices

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Shawna

4 months ago

A is too simplistic. Financial management isn't black and white. B captures the nuance required for this question.

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Cyril

3 months ago

C) No, because a credit rating is not an appropriate decision-making tool

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Kerrie

4 months ago

B) No, because a credit rating is only one financial tool to be used in determining financial competence

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Fausto

4 months ago

A) Yes, because this rating indicates poor financial management practices

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Lavera

4 months ago

C is just plain wrong. Credit ratings may not be perfect, but they're a useful tool in the procurement process. B is the sensible choice here.

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Tonette

3 months ago

A) Yes, poor financial management can lead to risks in the procurement process

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Shawnda

3 months ago

B) No, credit ratings are important but not the only factor to consider

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Zoila

4 months ago

A) Yes, because this rating indicates poor financial management practices

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Deeanna

4 months ago

B) No, because a credit rating is only one financial tool to be used in determining financial competence

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Martha

4 months ago

D is tempting, but a low credit rating doesn't necessarily mean imminent insolvency. There could be other factors at play. B is the way to go.

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Lon

4 months ago

A) Yes, because this rating indicates poor financial management practices

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Vincent

4 months ago

B) No, because a credit rating is only one financial tool to be used in determining financial competence

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Belen

5 months ago

The correct answer is B. A credit rating is just one factor to consider, not the sole basis for supplier selection. You need to look at the bigger financial picture.

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