ROTC, or return on total capital, is another measure of owner returns, which has gained popularity recently. The difference between ROTC and ROE is the denominator "TC," or total capital, vs, the "E," or equity.
Total capital is owner's equity plus long-term debt. Using the more"holistic" total capital gives a more complete measure of business performance; that is, how much the company is earning on its total investment, including borrowed funds.
ROTC helps investors see through the effects of leverage. If a company is growing ROE but not ROTC, chances are, the company is doing it by borrowing to fund growth-producing assets, thus leveraging the comapny (this can be a good thing in moderation).
So, many investors look at ROTC and ROE together. They should march side by side and change in unison.
Some information sources like Yahoo! Finance and Value Line list both figures simultaneously.
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