Li Chen has calculated profitability ratios using data extracted from his client's pre-audit trial balance. He also has the values for the same ratios for the preceding two years (using audited figures).

Ratio	2016	2015	2014
Gross profit margin	0.45	0.35	0.40
Profit margin	0.09	0.15	0.20

Li is a little confused because the profit margin shows declining profitability, but the gross profit margin has improved in the current year and is higher in 2016 than in the previous two years.

Required

A) Make list of possible explanations for the pattern observed in the gross profit and profit margin

B) Which of your explanation suggest addittional audit work should be planned ? for each explain the accountas and /or transactions that would need special attentions in the audit?