This study investigates whether private debt holders focus more on earnings or cash flows of their borrowers in debt evaluation. I utilize estimates of credit losses and realizable value of loans as reported by commercial banks in regulatory filings to explore how private debt holders react to information about borrowers' operating performance. I find that changes in estimates of credit losses are significantly associated with measures of borrowers' current and future operating performance, especially with operating income growth. I also find that when assessing borrowers' performance, private debt holders consider some accruals (e.g., working capital accruals) more informative than others (e.g., depreciation). Furthermore, I show that the estimates of credit losses provide incremental information about borrowers' future short term profitability growth over several measures of equity investors' expectations (valuation ratios, stock returns, past growth rates, and analyst forecasts). While this is consistent with the widely held belief that private debt holders have superior information about their borrowers, it also suggests that other investors may be ignoring some useful information provided by private debt holders.