Sitemap

Return on total capital definition

Description

Return on total capital (ROTC) is one of many profitability ratios and is used rather rarely. Data to calculate this ratio is collected from the income statement and balance sheet.

ROTC indicates the relationship between company’s operating profit (EBIT) and its assets.

Norms and limitations

There are no common norms and limitations for this ratio.

Value for ROTC can differ between various fields of industries.

Formula

Earnings before interest and taxes (EBIT) equal net income plus interest expense plus taxes.

Total capital can be found on balance sheet as a value of total liabilities and shareholders’ equity.