The circular reference error message "There are one or more circular references where a formula refers to its own cell either directly or indirectly. This might cause them to calculate incorrectly. Try removing or changing these references, or moving the formulas to different cells."
Cyclic dependencies between components inhibit understanding, testing, and reuse (you need to understand both components to use either). This makes the system less maintainable because understanding the code is harder. Lack of understanding makes changes harder and more error-prone.
Circular references aren't a bad thing in itself: you can use them to achieve complex calculations that are otherwise impossible to do, but first you must set them up properly.
and, yes, cyclic dependencies are bad: They cause programs to include unnecessary functionality because things are dragged in which aren't needed. They make it a lot harder to test software.
Circular dependencies between classes are not necessarily harmful. Indeed, in some cases they are desirable. For example, if your application dealt with pets and their owners, you would expect the Pet class to have a method to get the pet's owner, and the Owner class to have a method that returns the list of pets. Sure, this can make memory management more difficult (in a non-GC'ed language). But if the circularity is inherent in the problem, then trying to get rid of it is probably going to lead to more problems.
On the other hand, circular dependencies between modules are harmful. It is generally indicative of a poorly thought-out module structure, and/or failure to stick to the original modularization. In general, a code-base with uncontrolled cross-dependencies will be harder to understand and harder to maintain than one with a clean, layered module structure. Without decent modules, it can be much harder to predict the effects of a change. And that makes maintenance harder, and leads to "code decay" resulting from ill-conceived patching.
(Also, build tools like Maven won't handle modules (artefacts) with circular dependencies.)
Circular references are not always harmful - there are some use cases where they can be quite useful. Doubly-linked lists, graph models, and computer language grammars come to mind. However, as a general practice, there are several reasons why you may want to avoid circular references between objects.
Data and graph consistency. Updating objects with circular references can create challenges in ensuring that at all points in time the relationships between objects are valid. This type of problem often arises in object-relational modeling implementations, where it's not uncommon to find bidirectional, circular references between entities.
Ensuring atomic operations. Ensuring that changes to both objects in a circular reference are atomic can become complicated - particularly when multithreading is involved. Ensuring consistency of an object graph that is accessible from multiple threads requires special synchronization structures and locking operations to ensure that no thread sees an incomplete set of changes.
Physical separation challenges. If two different classes A and B reference each other in a circular fashion, it can become challenging to separate these classes into independent assemblies. It's certainly possible to create a third assembly with interfaces IA and IB that A and B implement; allowing each to reference the other through those interfaces. It's also possible to use weakly typed references (e.g. object) as a way to break the circular dependency, but then access to the method and properties of such an object couldn't be easily accessed - which can defeat the purpose of having a reference.
Enforcing immutable circular references. Languages like C# and VB provide keywords to allow references within an object to be immutable (readonly). Immutable references allow a program to ensure that a reference refers to the same object for the lifetime of the object. Unfortunately, it's not easy to use the compiler-enforced immutability mechanism to ensure that circular references cannot be changes. It can only be done if one object instantiates the other (see C# example below).
class A
{
private readonly B m_B;
public A( B other ) { m_B = other; }
}
class B
{
private readonly A m_A;
public A() { m_A = new A( this ); }
}
Program readibility and maintainability. Circular references are inherently fragile and easy to break. This stems partly from the fact that reading and understanding code that includes circular references is harder than code that avoids them. Ensuring that your code is easy to understand and maintain helps to avoid bugs and allows changes to be made more easily and safely. Objects with circular references are more difficult to unit test because they cannot be tested in isolation from one another.
Object lifetime management. While .NET's garbage collector is capable of identifying and dealing with circular references (and correctly disposing such objects), not all languages/environments can. In environments that use reference counting for their garbage collection scheme (e.g. VB6, Objective-C, some C++ libraries) it is possible for circular references to result in memory leaks. Since each object holds on to the other, their reference counts will never reach zero, and hence will never become candidates for collection and cleanup.
Because now they're really one single object. You can't test either one in isolation.
If you modify one, it's likely that you affect its companion as well.
From Wikipedia:
Circular dependencies can cause many unwanted effects in software programs. Most problematic from a software design point of view is the tight coupling of the mutually dependent modules which reduces or makes impossible the separate re-use of a single module.
Circular dependencies can cause a domino effect when a small local change in one module spreads into other modules and has unwanted global effects (program errors, compile errors). Circular dependencies can also result in infinite recursions or other unexpected failures.
Circular dependencies may also cause memory leaks by preventing certain very primitive automatic garbage collectors (those that use reference counting) from deallocating unused objects.
Such an object can be difficult to be created and destroyed, because in order to do either non-atomicly you have to violate referential integrity to first create/destroy one, then the other (for example, your SQL database might balk at this). It might confuse your garbage collector. Perl 5, which uses simple reference counting for garbage collection, cannot (without help) so its a memory leak. If the two objects are of different classes now they are tightly coupled and cannot be separated. If you have a package manager to install those classes the circular dependency spreads to it. It must know to install both packages before testing them, which (speaking as a maintainer of a build system) is a PITA.
That said, these can all be overcome and its often necessary to have circular data. The real world is not made up of neat directed graphs. Many graphs, trees, hell, a double-linked list is circular.
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