CIPS L4m4 Ethical And Responsible Sourcing · Free Practice Question Easy
Question 5
- A to understand the level of risk the supplier poses to your organisation
- B to understand if their prices reflect market value
- C to find out how much money the supplier has in the bank
- D to find out if the supplier has any unethical business practices
Reveal correct answer
Correct answer: A
Explanation
A credit rating generates a score which reflects 'the level of risk an organisation poses when dealing with other businesses'. It's saying how risky it is to loan them money or do business with them by looking at how good they are at paying people. So a high credit rating will say they're good at paying back their loans and paying their suppliers on time. A poor credit rating will say they often miss payments or pay late.
A credit rating will not tell you how much money they have, or details on their prices. Credit scores looks at purely financial data so wouldn't help you analyse whether their business practices are ethical or not.
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Discussion
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