Leverage measures show how heavily a company relies on borrowed money, often as debt divided by earnings. Lease-adjusted versions add lease obligations to the debt, and in some versions they also adjust earnings to exclude lease costs, for example by using earnings before interest, taxes, depreciation, amortization and rent. Credit rating agencies and analysts use these adjusted ratios to compare companies on the same basis.
The adjustment matters because two companies can run the same business in different ways. One buys its buildings and borrows to do so, and the other leases them. Without including leases, the second looks less indebted, although it owes fixed payments in the same way.
Methods differ. Some use the lease liability from the balance sheet, others capitalize rent with a multiple, and some include only certain types of lease. Companies also have leases that have not started.
Check how the ratio is defined, apply the same method to every company you compare, and consider whether future lease commitments are included.