(a)  Possible reasons for changes in ratios
All of the changes noted below may also be due to simple accounting errors or, in some cases, misappropriation of inventory or cash.

(i) Increase in current ratio
An increase in the current ratio may indicate increased inventory, cash, or receivables levels. The implications of this may be that the company is expanding, or alternatively that it is experiencing trading difficulties and is unable to sell its inventory or to collect its receivables. An increase can also be due to a decrease in trade payables or other current liabilities.

(ii) Decrease in gross profit margin
A decrease in the gross profit margin may indicate that the cost of raw materials or bought-in goods has increased, or that discounts or selling prices have decreased. This may not be a bad thing if the reason for this is an overall increase in revenue.

(iii) Increase in inventory holding period
The inventory holding period indicates the number of days the company could continue to trade if supplies were to cease. The longer the period, the higher the level of inventory held. Inventory holding involves expenditure. Generally, the lower the figure the better provided that the company does not run out of inventory. An increase can indicate that the company is unable to sell its inventory. An increase can also indicate that the company is expecting additional sales, or simply that the business is expanding. Many businesses are cyclical and increases and decreases are to be expected.

Concept
Automated tools and techniques (ATTs) can be defined as any technique that enables the auditor to use computer systems as a source of generating audit evidence. They involve the use of computer techniques by the auditor to obtain audit evidence.
ATTs give the auditor an ability to test a larger number of transactions in a relatively short amount of time. Testing larger amounts of data reduces the overall audit risk.
Automated tools and techniques include artificial intelligence, data analytics, audit software, and test data.

How automated tools and techniques are used at the planning stage of the audit
ATTs can be used in performing risk assessment procedures at the planning stage of the audit. For example, a data analytics program can be used to identify unexpected variances or unusual journal entries. If the auditor finds an unexpectedly large number of manual journals in trade receivables, they might conclude there is an increased risk of fraud or error in the trade receivables account and thus a higher risk of material misstatement. This will impact the nature, timing, and extent of audit procedures the auditor plans to perform in this area.