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A detail answer is avaiable at below link.
http://www.thomasnet.com/articles/instruments-controls/magnetic-flowmeter-principles
The answer of this question is not so simple as to explain the working principle, we will need diagrams and formulas, which is off course not possible to furnish here.
There are too many articles on this device, the link of one is shared by Mr Adnan Ahmad and i also share one for refrence.
http://www.krohnecd.com/pdf/KOG_Liquid/Praxis%20der%20MID%20EN_LR.PDF
A deatil answer link is already provided by Mr Adnan Ahmad
