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CIPS L4M5 Exam - Topic 4 Question 11 Discussion

Understanding supplier's mark-up and margin can provide procurement professional a comprehensive insight into supplier's net profits. Is this statement true?
B) No, because mark-up and margin inform little about supplier's net profit
A) Yes, because supplier's mark-up and margin are two most valuable sources of information to procurement
C) No, because margin is enough to tell procurement about supplier's profitability
D) Yes, because these are two indicators of supplier's future prospect

CIPS L4M5 Exam - Topic 4 Question 11 Discussion

Actual exam question for CIPS's L4M5 exam
Question #: 11
Topic #: 4
[All L4M5 Questions]

Understanding supplier's mark-up and margin can provide procurement professional a comprehensive insight into supplier's net profits. Is this statement true?

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Suggested Answer: B

Mark-up and margin allow supplier to make gross profit. Remember that every supplier operates under different cost structures and some are set up to be most profitable at a particular level of volume, so it is dangerous to assume all suppliers can survive on a lower margin if their volume increases. Intelligent buyers understand that mark-up and margin may define gross profits, but they tell you very little about a supplier's net profits.

LO 2, AC 2.1


by Ceola at May 03, 2022, 10:46 AM

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Jolanda
8 months ago
True, understanding both is crucial for better negotiations!
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Marcos
9 months ago
Wait, can mark-up really tell us about future prospects? Sounds off.
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Daniel
9 months ago
Actually, margin alone can give a good insight into profitability.
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Chau
9 months ago
I disagree, they don't show the full picture of net profit.
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Daron
9 months ago
Mark-up and margin are definitely key indicators!
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Joseph
9 months ago
Ah, I see what they're getting at here. The whiteboard was used for requirements elicitation, so the information needs to be properly documented. Option C seems like the best choice - the business analyst should transfer the whiteboard data and get approval from the participants. Feels like the most comprehensive approach.
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Rachael
9 months ago
This is a good question to test our knowledge of SAP Master Data Governance. I'm confident I can figure this out by recalling the material creation process and the purpose of the temporary ID.
upvoted 0 times
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