Limited lateral rotation of the shoulder can be an indicator of both arthritis and bursitis. Arthritis is a condition that causes inflammation and stiffness in the joints, which can restrict movement and lead to limited rotation of the shoulder. Bursitis, on the other hand, is the inflammation of the bursae, which are small fluid-filled sacs that cushion the joints. When the bursae in the shoulder become inflamed, it can cause pain and limited range of motion, including limited lateral rotation. Therefore, the presence of limited lateral rotation in the shoulder can suggest both arthritis and bursitis as potential underlying conditions.