What does an entity-relationship diagram represent?

An entity-relationship diagram (ERD) is a valuable tool in database design that provides a graphical representation of entities within a system and the relationships between them. Entities can be objects, concepts, or events, and an ERD illustrates how these entities interact with one another, which is crucial for understanding the underlying structure of the data in a system.

This clarity helps stakeholders conceptualize how data is stored and organized, making it easier to identify requirements and potential issues in data management. By showcasing the connections and dependencies among various entities, an ERD also facilitates communication between technical and non-technical stakeholders, enhancing collaboration during the requirement analysis phase.

Other options, while relevant to project and business analysis, do not align with the specific function of an ERD. Options related to the flow of finances, external business factors, or project management tasks focus on different aspects of project and business analysis, rather than the representation of data relationships within a database or system.