I'm guessing that most readers who clicked on this headline think I'm referring to the earnings-per-share growth Cisco (NASDAQ:CSCO) reported last night.

While it's true that Cisco once again reported improved earnings per share and sales, I'm actually referring to the relationship between the company's sales growth, inventory growth, and accounts-receivable growth. It's generally a good sign when sales growth outpaces growth in inventory and accounts receivable. If growth in those sectors outpaces sales, it's a bad sign -- the larger the divergence, the worse the omen.

For the last three years, and again this quarter, Cisco has consistently been somewhere in the middle on this measurement. Its inventory and accounts-receivable growth dramatically flared up in a couple of quarters over the last few years, but those are mostly aberrations. It's more troubling that Cisco hasn't turned in a quarter during that period where accounts receivable or inventory growth was slower than sales.

Personally, I'm curious to see how long the company can keep it up. Generally these things balloon out of control for a few quarters, and then you see a writedown. Cisco has been down this path before, as has Intel (NASDAQ:INTC).

Cisco still isn't a bad company. It generates tons of free cash flow and plenty of cash on the balance sheet. We're also not looking at nearly so wacky a valuation for Cisco in 2005 as we were in 2000 or 2001. It has plenty of qualities I like to see in a company.

Still, I wish management would put its cash to work more effectively. Yes, the company buys back stock, but it also issues an enormous amount as well and has fought tooth and nail against demands to account for those options. While Cisco is quick to point out that it bought more than 1.4 billion shares in the last four years, it also issued more than 960 million shares over the same period. Though the recent spread has turned positive, I'd be much more impressed if the company committed to paying a regular cash dividend and augmented it with selective stock repurchases. One is a long-term commitment to shareholders; the other is mostly window dressing.

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Nathan Parmelee has no financial interest in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.