Transformers operate by exploiting the principle of mutual inductance between two coils. They are used to convert alternating current (AC) voltages from one level to another. An ideal transformer consists of two coils wound on a common magnetic core, with no direct electrical connection between them. Current flowing through the primary coil produces a changing magnetic flux that induces a voltage in the secondary coil. Transformers are widely used in power distribution systems to increase or decrease voltages as needed.