We present an AC original polarimetric method to study `Faraday rotation' of ferrofluids. The studied magnetic liquids are colloidal suspensions of Fe2CoO4 ferrite particles dispersed in various solvents. This method is based on an experimental device involving a Faraday modulator positioned between a polarizer and an analyzer with an angular uncrossing of a few degrees. From the detected light intensity we extract the various frequency components Vo, Vf and V2f where f is the field frequency (h(t) equals Ho.cos2(pi) ft). We consider the origin of the Faraday effect, with AC magnetic fields, in magnetic fluids, as the result of the orientation of the particles towards the field, producing a macroscopic magnetization which can be described by Langevin theory. The theoretical harmonic components Vo, Vf and V2f are calculated. We show that they depend on the physical characteristics of the magnetic liquids (concentration (phi) , saturation magnetization Md, mean diameter d of the magnetic particles). They also depend on the amplitude Ho and the frequency f of the AC magnetic field h(t). We also relate the theoretical expression of Vf with the time constant of the Brownian relaxation in the ferrofluids. We compare the theoretical and experimental variations of Vo, Vf and V2f with Ho and f for various ferrofluids. Finally we mention some applications concerning particles mean diameter and susceptibility measurement and magnetization curves determination.