My question is: what does the second equation doing? is it for normalization or what? Thanks in advance.

O_E = M * X;

E = ( sum( O_E.^ 2 ) ) ./ ( sum( X .^ 2 ) );

Where:

M = 100*100;

X = 100*500;

O_E = 100*500;

E = 1*500

[FAS]

...

[Rik]

You will have to provide more context. It is not very difficult to work out what the second line is doing (just read the documentation), but from your question it is impossible to say why it is doing that.