The article explores how debt contracts define net income and net worth, focusing on the importance of excluding temporary earnings in measuring income. Most contracts don't use comprehensive income for earnings but include other comprehensive income in net worth. Adjusting for negative earnings without corresponding positive earnings isn't a major factor. Net income definitions differ from standard accounting rules when it's crucial in a contract, the loan term is longer, and temporary earnings are less helpful. Overall, parties in debt contracts choose variables efficiently, with temporary earnings being less important for measuring firm performance in debt agreements.