A sequential circuit is signified by a time sequence of external inputs, external outputs and internal flip-flop binary states. So firstly a state diagram and state table is used to explain behaviour of circuit. Then from state table we get information for making logic circuit diagram.

Let's first see what is state diagram and state table. A state table includes functional relationships between inputs, output and flip-flop states (present and next) of a sequential circuit. A state diagram describes state transition. In state diagram a circle portrays a state and directed lines denotes transition between states. State of flip-flop is written inside circle. The directed lines are labelled with two binary numbers separated by a slash. The first one denotes input value during present state and second number denotes output at the time of present state.

Following is the process for design of sequential circuits:

1) Draw state diagram or state table from problem statement (if state diagram is available draw state table also)

2) Give binary codes to states.

3) From state table create input equation in simplified form which implies that generating Boolean functions that describes signals for inputs of flip-flops.

4) From state table derive output equation in simplified form.

5) Draw logic diagram with necessary combinational circuits and flip-flops.