B. If the seller extends credit that is a longer period of time than the buyer's operating cycle, the seller is providing longer financing than the buyer needs. Because the operating cycle is shorter than the credit terms, the buyer will have sold the inventory that they purchased on credit and collected the cash before the purchase needs to be paid for. Therefore, the buyer will be able to take this money and invest it for some period of time before needing to repay the loan. This provides the buyer with financing for more than the inventory itself.

C. The operating cycle of the buyer does not impact whether or not there is a need for a cash discount rate and a credit period.

D. While it is likely that the inventory will be converted into cash before the payment is due, it is not certain. The operating cycle is based on averages and for this specific inventory, maybe the actual time for collection will be longer than the operating cycle.